US government expects GM exit by year end

WASHINGTON (AFP) - The US government expects to sell its remaining stake in bailed-out General Motors by the end of the year, sooner than previously announced, the Treasury Department said Thursday.

The Treasury said it had just sold 70.2 million shares of common stock in GM, the largest US automaker, and was launching a plan to sell its remaining 31.1 million shares, about two per cent of GM capital.

"If average daily trading volumes continue at recent levels, Treasury anticipates that it will complete the sale of its remaining shares by the end of the year. However, that schedule remains subject to market conditions," the department said in a statement.

The new sell-by timeframe is shorter than the Treasury announced on September 19, when it said it planned to fully exit its GM investment within the next 12-15 months.

Shares in GM surged 3.1 per cent to US$38.86 ($S$48.50) in late-morning trade on the New York Stock Exchange.

GM said that while the US Treasury's equity stake draws to a close, it was continuing to transform the company. "We're making great progress in our efforts to make the most of this second chance by building outstanding cars and trucks, creating jobs and reinvesting in our country," it said in a statement.

GM was rescued by the US and Canadian governments in 2009 as the automaker plunged into insolvency during the financial crisis.

The number-three automaker Chrysler, also collapsing, was bailed out; number-two Ford survived the crisis without a rescue.

"Treasury's investment in the American auto industry was part of President (Barack) Obama's broader response to the financial crisis, and it helped save more than one million jobs," Mr Tim Bowler, Treasury deputy assistant secretary, said in the statement.

"Had we not acted to support the automotive industry, the cost to the country would have been substantial - in terms of lost jobs, lost tax revenue, reduced economic production, and other consequences." Bowler noted that all three of the US automakers were now profitable, and more than 340,000 new auto jobs had been created since GM and Chrysler emerged from bankruptcy in 2009.

Treasury said it has recouped a total of US$38.4 billion for taxpayers from its US$51.0 billion investment in GM.

The sale of the remaining stake, calculated at Wednesday's closing share price of US$37.69, would bring in about US$1.2 billion, leaving a taxpayer loss of US$11.4 billion on the bailout.