Page last updated at 12:59 GMT, Friday, 10 July 2009 13:59 UK

Q&A: What now for General Motors?

Buick Le Sabre
GM has survived the Great Depression and two world wars.

Detroit-based General Motors (GM) has announced its exit from Chapter 11 bankruptcy protection.

Once the world's largest carmaker, it has sold its best assets to a "new GM", in which the US government is the largest shareholder.

Spurred on by the Obama administration's support, the process took just 40 days, slightly quicker than cross-town rival Chrysler's 42 days in Chapter 11.

It is hoped that GM will now be on a path towards a profitable future.

GM has come out of bankruptcy protection - what does this mean?

Chapter 11 allows a faltering US business time to re-organise its finances, protected from its creditors.

GM entered Chapter 11 bankruptcy protection on 1 June 2009 with liabilities of $172.8bn (£106.7bn), and is set to emerge with debts reduced to $48.4bn.

What is the "new GM"?

The "new GM" is a leaner, smaller company.

It has shed tens of thousands of workers, eliminated or sold brands, closed scores of factories, and rewritten its employment contracts to cut costs.

Its load has also been lightened by the removal of massive debts racked up during four straight years of losses.

It will operate the best parts of the old company, including its Chevrolet, Cadillac, Buick and GMC brands.

Who owns the "new GM"?

The US government - which has provided some $50bn in financing - will receive a 60.8% stake in the new company.

Canada, which provided $9.1bn in loans, will have an 11.7% stake.

A United Auto Workers union retiree healthcare trust fund will hold 17.5%.

The "old GM" will retain a 10% stake - this is to allow creditors to recover some of their losses.

President Barack Obama, whose auto taskforce spearheaded the GM restructuring plan, says it will not be taking part in the firm's day-to-day operations.

It also does not wish to remain a long-term shareholder, and could begin to sell its stake as early as next year.

Chevrolet vehicle
GM is emerging from Chapter 11 as a leaner company

Does this mean everything is okay, and the firm is on the road to recovery?

While the new GM's operating costs will be significantly lower, analysts say it could be a while before it is able to sell enough vehicles to make a profit.

One thing which has to be repaired is the firm's battered reputation.

Industry-wide global car sales also remain very weak following the credit crunch and subsequent global recession.

During the past six months, car sales in the US have fallen by more than 30%, while in Japan they have declined 20%.

However, government-backed car scrappage schemes in some countries have started to provide a lift, with sales in Germany jumping 40% in March.

What does it mean for GM Europe, and the UK's Vauxhall workers?

GM continues to work to sell off its "non-core" brands and other assets, including its European operation GM Europe, and that's two main brands, Germany-based Opel and the UK's Vauxhall.

GM Europe was separated from its parent firm and temporarily placed with a trust fund before GM entered bankruptcy protection.

A deal with Canadian car parts firm Magna International to take over Opel and Vauxhall has been agreed, but not yet finalised.

Opel employs a total of 54,500 workers across Europe, with 25,000 based in Germany.

The Vauxhall brand employs 5,500 people in the UK, with plants in Luton and Ellesmere Port.

The German government has promised Opel 1.5bn euros (£932m, $11500m), including a bridging loan, to help boost finances until the Magna sale is concluded.

There are concerns that following the Magna takeover, the UK Vauxhall workers will suffer sharp job losses, with jobs at Luton thought to be most at risk.

This has added pressure on the UK government to intervene to support Vauxhall production.

UK Business Secretary Lord Mandelson has pledged to give Magna loans or loan guarantees to help secure the future of the two UK plants, yet he has also warned that some redundancies are likely.

Magna has warned that 2,500 job cuts at Opel in Germany are likely.

GM also recently signed deals to sell its Swedish-based Saab unit to that country's luxury sports car firm Koenigsegg, the Hummer brand to a Chinese consortium, and its Saturn unit to a US dealership chain.

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