DETROIT – General Motors Co reported a third-quarter operating loss of $1.2 billion on Monday but far better than it has reported from previous quarter and said strengthening sales and lower costs would help them to pay down $6.7 billion in US government debt ahead of their schedule and with their turn around of business.

The giant auto company said that they could pay off the full amount of their debt to US government by 2011, but still the money will come from funds loaned from the government.

The popular automaker also reported that they will begin by making $1 billion quarterly instalment payments on their loan with US Government in December and they will also plan to repay their $1.4 billion to Canada, thus making a total payment of almost $200 million.

On the other hand, the U.S. government extended a $50 million of refinancing to Gm but agreed to convert most of the balance into an equity of 61% from the automaker.

GM said that the reason for their improved performances was due to launching of Chervolet Camaro muscle car , Chervolet Equinox and GMC Terrain midsize crossover vehicles. The company reported that their top seller for the month of October were the Chevrolet Silverado pickup truck and the Impala full-size car.

To summarized, Gm posted an ending third quarter of $42.6 billion in cash and $17.4 billion in a special account created with the bankruptcy financing provided by the US government. It was said that the automaker allocated a total of $8.1 billion from the bankruptcy escrow account to pay their government debt.

Now, GM’s future plans is to sell stock to public market late next year so that taxpayers can recoup at least a portion of their remaining investment.