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Ford (NYSE: F ) is making money hand over fist and going from strength to strength in markets around the world. Solidly-profitable General Motors (NYSE: GM ) is the China sales king and is investing heavily in a new lineup of products. And on Monday morning came word that Chrysler has made its own return to profitability with help from partner Fiat, having refreshed its dated product line more quickly -- and more effectively -- than most observers thought possible.
As key competitors like Toyota (NYSE: TM ) and Honda (NYSE: HMC ) continue to reel from the effects of the Japan disaster, as well as a host of problems of their own making, each of the once-Big Three are thriving -- despite a U.S. auto sales rate that remains well below pre-2008 levels.
So how do you feel about those auto bailouts now?
Yes, the bailouts probably saved Ford too.
Let's get this out of the way up front: It's true that Ford didn't need, want, or get the kind of bailout that GM and Chrysler got from the U.S. Treasury, and the Blue Oval has benefited greatly from the goodwill generated by the company's willingness to "go it alone" without taxpayer aid. But make no mistake: As bitter a pill as it must have been for Ford executives to swallow, Ford wanted -- needed -- the bailouts of its rivals to happen. Without Chrysler and (especially) GM, many of Ford's key suppliers might well have collapsed in those dark days of early 2009. Even a few failures could have crippled Ford's North American production lines for months -- at a moment when Ford's turnaround plan needed every sale it could get to succeed.
Put another way, had the government not bailed out its biggest rival, Ford's daring turnaround effort might well have ended in collapse. Those bailouts didn't just save annoying old General Motors and moribund Chrysler; they helped make possible one of the great turnarounds in business history.
Oh, and they also kept hundreds of thousands of Americans employed at a moment when a historically bad recession could have become something much worse, and made it possible for the Detroit automakers to continue to represent American industry in (and bring home bacon from) markets around the world. All this for a relatively "small" expenditure? I'd say that's a pretty good deal.
Of course, the actual size of that expenditure is still an open question.
But will we ever be paid back?
Yes -- and maybe. As I write this, Chrysler still owes the U.S. Treasury $5.8 billion, but not for much longer: The company announced on Monday that it would be refinancing that debt, along with another $1.7 billion owed by the company to the Canadian government.
Chrysler has two good reasons to pay off the loan now, and patriotism isn't one of them. First, the company paid $1.4 billion in interest last year (while losing $652 million). Refinancing should bring that number down significantly going forward. Second, Chrysler has been hoping to take advantage of a low-cost loan program from the Department of Energy intended to help companies build more fuel-efficient cars, but the DOE has been reluctant to do business with Chrysler because of the outstanding bailout loans. Chrysler should now be able to move forward with the DOE's program, which has already benefited bailout-free Ford, Tesla Motors (Nasdaq: TSLA ) , and others.
And what about GM? Technically speaking, the $50 billion lent by the government to bail out GM has already been repaid -- in cash, last year, and in equity, which is being liquidated over time. But the truth is, the government needs an average selling price over $50 a share to break even on its "investment." With GM's stock price stuck in the low $30s for the time being, and with the Treasury Department and GM's leadership both anxious to see the government exit the auto business, odds are that the total proceeds from the stock sales will end up falling short of the amount of the original loan.
That's not likely to help the General's efforts to rebuild public goodwill in the wake of the still-unpopular bailout. But I will not be surprised if GM CEO Dan Akerson eventually announces a plan to make up the difference. To do otherwise would be to prolong a difficult chapter in a book GM -- and the rest of America -- is eager to see closed.