The wonderful Hummer, devil’s machine of death, metaphorically drove us to the edge of the recession and launched off full steam. We were all fairly certain the economy would continue to grow forever and ever while General Motors were deluding themselves into the belief that Japanese automakers would never be able to replace the SUV, so it was all in the clear. What GM failed to notice were the rising oil prices leading to higher gas prices, the impact of efforts made by the Federal Reserve to curb possible inflation in the early 2000s and the relentless pillaging by the United Auto Workers. This confluence of events led to significantly lowered sales across the board as people began to opt for gas-efficient and cheaper to maintain vehicles. GM’s efforts to recoup sales numbers by cutting prices (and therefore profits) of all their smaller cars only led to a bloated resale market that many potential consumers used to their advantage.

As the economy worsened and Chrysler began to tumble alongside General Motors, it was decided to begin an effort to sell-off many of the GM brands while simultaneously going to Congress for special investment to stave off bankruptcy. It was ultimately decided by Congress that bankruptcy offered GM the better option as it allowed the management to re-negotiate its pension and retirement contract with the UAW, a significant pull on their operating income. Additionally, many of GM’s creditors would be offered “get out now” deals, allowing the books to be more balanced.

Hummer felt the axe with the only potential buyer eventually scared away. Saturn followed suit, while Saab was eventually sold to Spyker Cars in February of 2010. These sales followed the sales of Opel and Vauxhall in Europe, original attempts to raise some immediate cash. Nothing worked and GM was forced to file for bankruptcy in June 2009. Under the terms of their bankruptcy, they were able to negotiate a new deal with the UAW, reducing their liabilities for pensions and retirement funds; GM was able to secure $30 billion in financial aid from the U.S. Treasury; the government took a 60.8% stake in the company. This is the largest stake the government has ever taken in a private firm.

General Motors has recently repaid its loans to the US, Canadian and Ontario government, a little over $5 billion and proclaimed that an IPO (initial public offering) may be possible by the end of 2010. Should they decide to do so, they will need to exceed the government’s stake, estimated at around $43 billion. Such an IPO would be greater than the Ford Motor Company’s entire worth. The White House has said they expect a loss on their investment in GM, but have reduced their estimate to $8 billion, a significant improvement over the $13 billion originally estimated.

With a much slimmer company and reduced product line, General Motors seems poised to actually make a decent comeback in the automotive market. Chrysler has already shown an operating profit in 2010 and looks to at least break even by the end of the year, a very good omen for GM. Toyota helped the case a bit by utterly falling over themselves BP-style and greatly harming their sales. Hopefully the American automakers can dig their way out of their graves before the end of 2010 and begin returning the taxpayer’s money to the government.