Raising finance:  GM in colossal sale of shares

General Motors (GM) – for decades the world’s biggest carmaker – have broken the record for the largest ever sale of shares, raising a whopping £12.6bn. Their shares rose 7% to $35.99 in early trade in New York, having been priced at $33 by the company. The sale marks what looks like an astonishing turnaround after the firm had to be rescued by American taxpayers in 2008.

More sales are planned for the near future which could push the record breaking deal even further. President Obama must be very relieved – he has faced hostile criticism for allowing the firm to survive with a $50bn government bail-out. But there’s still a long way to go if the taxpayers are to get all their money back. It’s thought the government will have to sell its remaining stock at around $50 a share for several years to recoup its investment. Now the US government has reduced its 61% stake in the company to around 33%.

But the bailout was never only about GM. The rescue package was aimed at a firm that was, in effect, “too big to fail” (just like a big chunk of the UK banking sector). Had it sunk, hundreds of thousands of jobs along the supply chain may have been lost. At the moment a general revival does seem to be under way, at least in terms of the profitability and competitiveness of the companies involved. But the cost has been huge: tens of thousands of workers were laid off, plants closed, familiar brands ditched and auto dealers told to look for other work.

Which car maker knocked GM off its top spot as the world’s number 1? The answer of course was Toyota. But Toyota’s dash for growth came with severe consequences with plummeting quality and a disastrous series of product recalls.