Now can we have our money back?

In a television ad earlier this year, General Motors chief executive Ed Whitacre ambled through a gleaming GM research facility and announced that the troubled automaker— recently bailed out by taxpayers to the tune of $50 billion—had repaid its government loans “in full, with interest, five years ahead of schedule.” Critics, however, detected a car salesman’s fast talk. Only US$6.7 billion of the U.S. and Canadian governments’ GM rescue package came in the form of actual loans. The rest, US$43.3 billion, is still tied up in GM through a majority equity stake.

Still, it was a rare bit of good news from a company that lost a staggering US$80 billion over the past four years, and was at risk of being left for dead just 12 months ago. And the positive vibe kept rolling this month when GM reported a first-quarter profit of US$863 million, its first since 2007. The return to black signalled a remarkable turnaround, and redemption from critics who said bailing out GM would be a colossal waste of taxpayer money. Now, there is mounting hope in Washington and Ottawa that a successful IPO will see most of the money returned.

Thanks to last year’s trip through bankruptcy protection, GM has slashed costs, wiped its balance sheet of debt and sells just four brands—Chevrolet, GMC, Buick and Cadillac—compared to eight previously. More importantly, GM is now building cars and trucks that are generating excitement among consumers, including the Ingersoll, Ont.-built Chevy Equinox and GMC Terrain crossovers. “They’ve already moved past one of their toughest points, if not their toughest point, in history,” says Jessica Caldwell, a senior analyst at U.S. car website Edmunds.com. “If they’re recording a profit now, it should only grow over time.”

GM’s resurgence came as its Detroit rivals also benefited from a rebounding economy. Ford Motor Co., which didn’t take any government bailout money, posted a US$2.1-billion profit in the first quarter. Meanwhile, Chrysler, now managed by Italy’s Fiat, significantly narrowed its losses during the period despite having little in the way of new vehicles to sell.

The stars seem to be aligning for the entire industry more quickly than many had predicted. U.S. auto sales should reach 11.7 million new vehicles this year after hitting a low of 10.4 million in 2009, and could return to historic highs of 17 million over the next two years, according to a recent study by A.T. Kearney Inc. But, in the case of GM, it’s not just the U.S. market that it needs to worry about. After deciding to hang on to its European division, Opel, GM now has the unenviable task of trying to restructure the business at a time when concerns about the health of the eurozone deepen—a challenge one observer likened to “catching a falling knife.” A slowdown in China could also have a disproportionate impact on GM given its large operations there.

There are also nagging concerns that GM is simply the old “General” in new clothing. While executives have talked at length about a culture change at the automaker, GM was quick to fall back on its self-destructive habit of using steep consumer incentives, including zero per cent financing deals and cashback offers, to move cars, trucks and SUVs after rival Toyota began implementing similar measures in response to its recall crisis. Data compiled by Edmunds suggests that GM incentives totalled US$3,301 per vehicle in April, which is down 18 per cent from a year ago, but still higher than what Ford is offering. In every segment of the market, Ford has a vehicle that’s successful, says Caldwell, noting that it has managed to increase its U.S. market share over the past year. “GM is trying to get into Ford’s place, but they are still lagging behind.”

But the biggest question mark in Detroit is the one that hangs over Chrysler. Unlike GM, the U.S. Treasury doesn’t expect to recoup most or all of its investment in the automaker. Chrysler has so far repaid only about US$3.9 billion of the US$14.3 billion it has been given since 2008, although that’s more than the U.S. government, which also holds an eight per cent equity stake in the company, was expecting. Sergio Marchionne, chief executive of Fiat and Chrysler, has nevertheless said Chrysler’s financial performance could surprise a lot of people and that an IPO could come sooner than expected. He has also said new small cars built with Fiat technology could be in U.S. showrooms as early as late 2011, a year earlier than previously expected.

No matter what happens, the turnaround in Motown has surprised a lot of people. The Big Three aren’t the biggest anymore, but they all still exist and are making plans for the future. Few would have predicted that a little over a year ago.