US Car maker General Motors (GM) has said it will start paying back its government loans earlier than expected.

It will make its first payment of $1.2bn (£717m) to the US government on December. GM had not been required to begin repaying the loan until 2015.

The news came as it reported a loss of $1.2bn from 10 July, when it emerged from bankruptcy, to 30 September.

GM chief Fritz Henderson said the firm still had work to do but the results were evidence of a “solid foundation”.

He pointed out that GM, now majority owned by the US government, had a healthier balance sheet with lower dept level. Revenues for the period were $78bn.

GM owes the US $6.7bn and the Canadian government $1.4bn Canada will also receive its first payment on December.

In addition, Germany will be repaid the outstanding 400m Euros (£358m) that it lent on support of GM’s European business Opel.

GM changed its mind over the sale of Opel earlier this month. It had been planning to sell it to a group led by the Canadian car parts maker Magna, but decided instead to retain ownership.

Sales on the US were boosted by the government-sponsored “cash for clunkers” incentive scheme.

GM said the market on China was proving to be a particularly strong contributor to its results. It is predicting “modest growth” in the global car industry in 2010.

In a conference call, Mr. Handerson said GM was preparing for a share offering in second half of next year.

Before GM went into bankruptcy protection in March it had lost $88bn since 2004 after car sales plummeted around the world.

The Obama administration lent the car company money to keep a float on the condition it took drastic action to turn the company around. The chief executive at the time, Rick Wagoner, was asked to resign.

GM emerged from bankruptcy with the US government owning 61% and stakes also held by the United Auto Workers Union, the Canadian government and GM bondholders.

The carmaker bankruptcy protection with roughly $94.7bn in debt. It emerged with $17bn, including the $6.7bn owed to the US government.

The global economic slow down hit just as Japan’s car makers were taking market share from US firms. Toyota overtook GM as the world’s biggest car maker by sales in 2007.