General Motors Co., in another sign of its progress since a government-led bankruptcy, said Thursday it is withdrawing its application for $14.4 billion in federal loans it had sought to help build more fuel-efficient cars.
GM, which has posted three straight profitable financial quarters since its 2009 bankruptcy, said it no longer needs the loans because the company's cash position has improved. GM applied for the loans in 2009 to modernize plants to build fuel-efficient vehicles.
"This decision is based on our confidence in GM's overall progress and strong, global business performance," said Chris Liddell, GM vice chairman and chief financial officer. Liddell said withdrawing the application was "consistent with our goal to carry minimal debt on our balance sheet."
Analysts said the decision amounted to another positive step for the company, which sought bankruptcy protection in 2009 and accepted nearly $50 billion in government help. The new GM had an initial public offering of stock in November, allowing the Treasury Department to sell a significant portion of its investment in the car company. U.S. taxpayers still own 33 percent of GM.
"I think it does send a signal to the marketplace and to the consumer that look, this company is running things on their own," said Citi Investment Research auto analyst Itay Michaeli. He said avoiding the low-interest loans would help improve GM's brand image because it distances the Detroit company from the bailout and dependence on the federal government.
GM made the announcement at the Washington Auto Show, where car companies often show off green technology vehicles to lawmakers and administration officials. GM officials said at the show that they would explore ways to increase production of the Chevrolet Volt rechargeable electric car and would make the Volt available to dealers in 50 states by the end of the year.
The $25 billion low-interest loan program is administered by the Energy Department. It was created by a 2007 law to help car companies retool older factories to build green cars.
Several automakers and auto suppliers have applied for loans from the federal energy program, and GM's decision to withdraw could give other car companies and suppliers a better chance of accessing the loan money.
Ford Motor Co. was approved for $5.9 billion in loans to upgrade several factories to eventually produce 13 fuel-efficient vehicles. Nissan was approved for a $1.6 billion loan to retool its plant in Smyrna, Tenn., to build electric vehicles and construct a battery manufacturing plant. Tesla Motors Inc. received $465 million in loans to build electric vehicles and electric-drive powertrains in California.
Chrysler CEO Sergio Marchionne said last week the company was seeking about $3 billion in loans from the Energy Department. The automaker had hoped to receive the loans by the end of last year but the government is still trying to work out collateral with Chrysler, Marchionne said.
Marchionne said the loans would be used to develop engines, transmissions, frames and other components.
Energy Department spokeswoman Stephanie Mueller said the GM decision would allow the department to "support a number of other innovative automobile technologies." The department has committed or closed five loans totaling nearly $8.5 billion.
"We will continue to work with a range of companies up and down the supply chain and will continue moving forward with those innovative technologies that need support to get to the marketplace," Mueller said.
