President Obama has staked his reputation on Obamacare. But a generation from now he may be best remembered for saving the American auto industry.
Just five years ago General Motors was on the verge of collapse. In 2008, it reported a loss of $31 billion right after a record loss of $37 billion the previous year. Vehicle sales plummeted by close to one-third in 2009 and GM, once the mightiest company in America, went bankrupt. At that point, ignoring its critics, the Obama administration stepped in with a combination of bailout money, loans and a huge purchase of stock in the carmaker.
GM hasn't looked back since. In 2013, GM sold a record 9.71 million vehicles globally, a 4 percent increase on the previous year. GM's performance is closing in on Toyota, which increased global sales half as fast but still sold slightly more vehicles. While Toyota remains the number one carmaker for now, GM is close behind. In 2012, Toyota led by a margin of 460,000 vehicles. Last year, that lead was cut nearly in half to just 270,000 vehicles.
Though GM's full-year earnings report will not come out until February 6, the company looks on track to show solid profits. For the first nine months of 2013, GM recorded net income of $4.3 billion. That was down slightly from the previous year, but the days of losing $30 billion a year seem gone for good. With a well-regarded new leader at the helm nobody will be surprised if GM takes back the global lead from Toyota. And although it ultimately cost taxpayers about $10 billion, at this point saving GM and with it the rest of the car industry looks like a savvy investment in America's future.
