General Motors (GM), the troubled US car giant, today announced that it would repay $6.7 billion (£4 billion) in US government loans, starting with a $1.2 billion in December.

The company made the pledge as it revealed a $1.2 billion loss for the three months to September in its first results since emerging from bankruptcy in July.

GM also confirmed that it had begun repaying a bridging loan to the German Government. Opel, part of GM's European business, has already repaid €500 million in November, and will repay the remaining €400 million balance by the end of the month.

The German Government had been hoping the company would forge ahead with a planned sale of its European business, which also includes Britain's Vauxhall, to Magna, the Canadian car parts maker.

However, GM decided to retain the business, prompting criticism from the German Government and strike action from Opel workers.

Fritz Henderson, president and chief executive of GM, said today that although the company clearly had “significantly more work to do”, the results provided evidence of the solid foundation that was being built for the new business.

“With a healthier balance sheet and a competitive cost structure, our focus is on driving top line performance. We’ll achieve that by winning customers over, one at a time, with vehicles that deliver performance and value,” he said.

GM posted revenue of $28 billion between July and September 30. Strong sales in China helped push international demand, giving the company global market share of 11.9 per cent in the third quarter, up 0.3 percentage points from the first half of the year for the pre-bankruptcy GM, or "old GM".

Despite a boost in sales resulting from the US government-subsidised ‘cash for clunkers’ car scrappage scheme, GM’s US market share in the third quarter was 19.5 per cent, flat in relation to Old GM’s US share for the first half of the year.

Its core North American unit lost $651 million, with the international business returning a profit of $261 million.

GM finished the third quarter with US dealer inventories of approximately 424,000 vehicles, a reduction of approximately 158,000 units from the end of the second quarter.

The company said it continued to make progress on cutting costs through job cuts, engineering savings and restructuring. Its structural cost for the period starting July 10, when it emerged from bankruptcy, to September 30 was $9.1 billion. This compares with $22 billion for the period from January 1 to July 9.

GM reported positive managerial cash flow of $3.3 billion during the period, before special items including a $505 million cost relating to the closure of many of its dealers as well as charges related to Delphi, one of its principle suppliers.

As of September 30, 2009, the company held $42.6 billion in liquid cash and marketable securities, but this amount, which includes money earmarked for loan repayments and settlements with a major supplier, is expected to decline significantly in the fourth quarter.

The company is hoping that the better than expected results will mark a turning point in its fortunes.

The company lost $78 billion from 2006 up to and including the first quarter of this year and forced it to seek $50 billion in bailout funds from the US government. Its losses and debt eventually forced the company into bankruptcy in June.

GM entered bankruptcy protection in June with roughly $94.7 billion in debt. It emerged with $17 billion, including the $6.7 billion owed to the US government, which now holds a 61 per cent equity stake in the company.

The company plans to sell stock to the public late next year so taxpayers can recoup at least part of their remaining investment, though GM Chairman Ed Whitacre said last week the timing of any GM IPO remains uncertain and depends on when the company returns to profitability.

Ray Young, the company’s chief financial Officer Ray Young warned that the figures released by the company for the second and third quarters do not fully comply with US accounting standards and cannot therefore be used to make comparisons with previous earnings.

The figures show, for example, that the company had net earnings of $79.4 billion for the first nine days of the third quarter, when it remained under bankruptcy court protection but was able to scrap much of its debt and other obligations from its balance sheet.

GM expects to meet accounting standards when it reports full-year results for fiscal 2009.

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