General Motors gets another fat check from Uncle Sam

On the same day, GM announced it will buy Ally: what was once known as GMAC, the financial arm of the failed company. The size of the purchase is not known at this time.

General Motors, the centenarian company that was once the boast of the American industrial complex, was recently the recipient federal government largesse. GM, which has had $25 billion invested by the U.S. government, received a federal grant this week of $3.5 million to assist with $1.6 million in private investment. The subsidy is part of the government's push to see the development of special alloys to go into high-efficiency automotive engines.

According to a news release from the U.S. Department of Energy, this was part of a deal with U.S. automakers to come up with weight-saving measures as part of three projects in Michigan (GM's home turf) to develop stronger and lighter automotive materials and thus boost efficiency and economy. These include projects for developing model tools for carbon composites and specialized steel, as well as research on lightweight and high-strength alloys for automotive engines. 

The replacement of cast iron, and parts made with steel, with light-weight alloys for engines, as well as carbon fibre parts for car bodies, are expected to help U.S. automakers to meet the goal of 54.5 mpg set by the federal government for 2025. Lighter-weight materials may allow also for additional safety features, and new technologies designed to reduce emissions without increasing vehicle weight.

On the same day, General Motors announced that it had submitted a bid for the international operations of Ally Financial, which could more than double the assets of the financial arm of the company but also greatly increase its debt. In its filing with the Securities and Exchange Commission, GM did reveal how much it has offered to pay for Ally. Ally was GM's financial unit until the banking meltdown of 2008. It was then known as GMAC, providing vehicle loans and home mortgages. Seventy-four percent of Ally is now owned by the federal government.



Spero News editor Martin Barillas is a former US diplomat, who also worked as a democracy advocate and election observer in Latin America. He is also a freelance translator.

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