GM Repays Over Half Of The $16B It Borrowed To Get Through COVID

GM has repaid over half of the $16 billion it borrowed to fortify its cash reserves in the midst of the COVID-19 pandemic, the automaker reported in its Q3 2020 earnings.

For those not keeping very close tabs on The General’s financials, here’s a quick rundown: in March, GM drew down $16 billion from its available credit lines, which – at the time – represented the majority of its $16.5 billion available credit lines. It then repaid $5.2 billion during the third quarter, followed by an additional $3.9 billion in October, meaning that the Detroit-based automaker has thus far paid back $9.1 billion, or about 57 percent, of the $16 billion it borrowed.

GM’s Q3 2020 earnings was highlighted by an impressive $4.0 billion in income on $35.5 billion in revenue. The results enabled GM’s automotive liquidity to be above target while ending the quarter with $37.5 billion in liquidity. Better still, GM said in its earnings report that it “expects to repay the balance by year-end while maintaining a strong cash balance.”

Like most automakers, GM suffered through roughly two months of idled U.S. production during the COVID-19 shut down, which started in mid-March. The circumstance put the firm in a precarious financial position, wherein it burned through cash while bringing in significantly less revenue than normal.

To minimize the impact and remain viable, General Motors implemented various austerity measures, including suspending its quarterly cash dividend on common stock as well as its voluntary share repurchase program. The General has also “taken other significant austerity measures to preserve near-term available cash,” such as deferring payments to employees.

Additionally, GM bolstered its credit lines, extending its $4 billion, 3-year credit facility intended for its core business by $3.6 billion in late April. GM also extended the $2 billion, 364-day revolving credit line earmarked for its captive finance arm, GM Financial, to April 2021.

Luckily, GM production restarted on May 18^th in the United States, subsequently followed by other countries within the Americas. The automaker is seeing strong interest in many of its vehicles, with demand for some models like trucks, SUVs and the Corvette C8 outpacing supply. And even though COVID-19 is not in the rearview mirror just yet, we can at least take solace in knowing that there’s light at the end of the tunnel after all.

We’ll continue following keeping track of GM’s financial health and report back as events unfold, so be sure to subscribe to GM Authority for more GM business news, GM financial news, GM-related COVID-19 news, and ongoing GM news coverage.