GM’s Journey: From American Icon to Bankruptcy and Beyond

General Motors (GM) has long been a major player in the automotive industry, once standing as the largest automaker in the world. At its peak, GM was the largest automaker in the world, known for popular brands like Chevrolet, Cadillac, and Buick. It became a symbol of American strength and innovation, setting the standard for the automotive world.

However, GM’s path to success hasn’t been without its challenges. The company faced a major setback during the 2008 financial crisis, leading to its bankruptcy and a government-backed bailout.

Yet, GM managed to rise from the ashes, reinventing itself as a leaner and more innovative company. This resurgence demonstrated that even the largest of corporations can overcome adversity and come back stronger.

Today, GM is still a major player in the automotive industry, but it no longer holds the same level of dominance it once did. While it remains important, the company now faces new challenges as it competes with other automakers and adjusts to changes in technology. The big question is whether GM can rise again and continue to lead the industry.

The Glory Days of GM Before The 2009 Bankruptcy

For much of the 20th century, General Motors (GM) wasn’t just an automaker – it was a symbol of American innovation, industrial might, and economic success.

Founded in 1908, GM grew rapidly by acquiring key brands such as Chevrolet, Buick, Cadillac, and Oldsmobile, creating a diversified automotive empire that could cater to nearly every consumer demographic and income level.

By the 1950s and 1960s, GM was the uncontested leader in the global automobile market. Its strategy of offering multiple brands at different price points – luxury, mid-range, and economy – allowed it to dominate every segment. Cadillac became synonymous with luxury and innovation, Buick and Oldsmobile served the mid-market, and Chevrolet was the go-to choice for the average American family.

GM’s influence extended beyond vehicles. The company was a major employer, innovator, and cultural touchstone. It pioneered annual model updates, the use of styling and design as marketing tools, and embraced cutting-edge technologies like automatic transmissions, power steering, and safety innovations.

Its factories symbolized the strength of American manufacturing, employing hundreds of thousands and fueling local economies.

For decades, GM topped the Fortune 500 list by revenue, reflecting its massive production scale and profitability. The company’s leadership in automotive design, engineering, and marketing made it the envy of the corporate world. Its annual meetings were major events, and GM executives were seen as the architects of American industrial success.

During its peak, GM invested heavily in research and development, establishing facilities like the GM Technical Center in Detroit. It was a hub for innovation, producing groundbreaking designs and technologies. The Corvette became an American sports car icon, while Cadillac set the benchmark for luxury and style.

The 2008 Collapse: How the Recession Forced GM into Bankruptcy

The 2008 recession was the breaking point for General Motors, which had already been struggling to maintain its dominance in the face of rising competition and high operational costs.

GM’s decline, coming after decades of dominance, was driven by a combination of internal and external pressures that undermined its once-unassailable position.

Car sales sharply declined during the economic downturn, but GM’s financial troubles were exacerbated by its inability to adjust quickly to changing market conditions.

While foreign automakers like Toyota and Honda had capitalized on the growing demand for fuel-efficient and affordable vehicles, GM’s focus on larger SUVs and pickups left it vulnerable to a shift in consumer preferences.

At the same time, GM was burdened by high labor costs due to generous union contracts and massive retiree benefits. These financial obligations made it difficult for the company to adjust its operations to a more competitive and sustainable model.

Despite efforts to reinvent itself through initiatives like the Saturn brand and focusing on more fuel-efficient models, GM was caught in a financial bind.

The collapse became inevitable when the recession hit and car sales plummeted even further. GM, facing massive losses and unable to meet its high costs, was forced to file for bankruptcy in 2009.

As part of the bankruptcy proceedings, GM was forced to make tough decisions, including shutting down several well-known brands like Pontiac and Saturn, which had long been a part of the company’s identity.

From Collapse to Comeback: GM’s Road Out of Bankruptcy

Though GM seemed destined for collapse after its bankruptcy, it ultimately managed to escape the crisis and begin its recovery.

Unlike many corporations that disappeared after such a fall, GM was deemed “too big to fail.”

The U.S. government, recognizing the immense impact of GM’s collapse on the economy and workforce, stepped in with a nearly $50 billion bailout through the Troubled Asset Relief Program (TARP), taking a 60.8% ownership stake in the company. This financial lifeline allowed GM to restructure and offload significant debt, cutting it by around $27 billion.

The restructuring process was brutal but essential for survival: GM closed 14 plants, reduced its dealership network by over 2,000, and eliminated struggling brands like Pontiac, Saturn, Hummer, and Saab. These moves helped GM refocus on its core brands – Chevrolet, Buick, Cadillac, and GMC – and set the stage for its eventual resurgence.

In the aftermath of its bankruptcy, GM launched an initial public offering (IPO) in 2010, raising $20.1 billion, marking one of the largest IPOs in U.S. history and signaling to the market that GM was back on solid footing.

The company’s recovery was also driven by its strategic shift toward innovation, particularly in the growing field of hybrid and electric vehicles. The Chevrolet Volt, launched in 2010, made GM a pioneer in the hybrid-electric market, addressing consumer concerns about fuel efficiency and environmental impact.

GM further solidified its position in the electric vehicle (EV) market with the launch of the Chevrolet Bolt EV in 2016, an all-electric car with a range of over 200 miles per charge – a step forward in GM’s EV strategy.

At the same time, GM embraced global markets, particularly China, where the company became one of the top foreign automakers. In 2020, GM sold more than 3.1 million vehicles in China, and Buick, once considered a niche brand, unexpectedly became a best-seller in the region, contributing heavily to GM’s recovery.

Despite GM’s financial recovery, it was not without challenges. The 2014 ignition switch scandal, in which faulty switches led to tragic accidents and multiple deaths, severely damaged GM’s reputation and forced the company to reckon with its past failures.

GM responded by undertaking a cultural overhaul, focusing on accountability, safety, and transparency. Under new leadership, GM’s approach to safety was revamped, and the company implemented a global safety policy to ensure better oversight and product quality.

By 2010, GM had returned to profitability, reporting a net income of $4.7 billion and continued to show strong results, with $6.4 billion in operating income in 2020, despite the challenges posed by the COVID-19 pandemic.

GM also renegotiated union contracts, cutting down long-standing retiree costs, and went public again in 2010, raising $20.1 billion in one of the largest IPOs in U.S. history.

With a renewed focus on innovation, GM launched the Chevrolet Volt in 2010, leading the way in hybrid-electric cars, and later introduced the Chevrolet Bolt EV in 2016, marking its commitment to electric vehicles. International markets, especially China, became crucial for GM’s growth, with sales in the region reaching 3.1 million vehicles in 2020.

In addition to its commitment to safety and innovation, GM redefined its future in the automotive industry.

In 2016, GM acquired Cruise Automation, a self-driving car startup, for $1 billion, signaling the company’s shift toward autonomous driving. GM’s leadership in mobility was further solidified with its investment in electric vehicles, with the company committing to producing only electric vehicles by 2035. 

With a focus on both autonomous driving and electric mobility, GM is positioning itself not just as a traditional automaker but as a forward-looking mobility company that will lead the future of transportation. 

The company’s investment of $27 billion in electric and autonomous vehicles by 2025 and its plans to launch 30 new electric vehicles globally by that year are a testament to GM’s determination to adapt to the future.

The Struggles Return: GM’s Latest Setbacks

Despite its dramatic comeback from bankruptcy, GM soon found itself entangled in fresh challenges that threatened the stability of its recovery.

Tariff Pressures & Operational Challenges

General Motors finds itself in the crosshairs of trade policy once again, as the newly imposed U.S. tariffs threaten to dismantle hard-won progress since its post-bankruptcy recovery.

The company disclosed that the tariffs could strip $4–5 billion from 2025 earnings, a blow that has already rattled investors and forced GM to scale back its ambitious financial outlook.

The impact is not theoretical – Q2 results showed a $1.1 billion hit to operating income, dragging profits down by 35% year-over-year and triggering a 7% stock price plunge as Wall Street recalibrated expectations.

The root of the problem lies in GM’s heavy reliance on global supply chains and overseas manufacturing hubs. While the company produces many vehicles in North America, it still imports critical parts, materials, and fully built models from Asia and Europe.

The new tariffs – targeting both vehicles and components – have effectively increased GM’s costs across the board, undermining its pricing flexibility in a highly competitive market.

Unlike Toyota or Hyundai, which have invested heavily in U.S. production capacity over decades, GM is now playing catch-up, moving some pickup truck assembly to Indiana and evaluating further reshoring of operations.

To soften the blow, GM has laid out a multi-pronged strategy: cutting operational expenses, negotiating with suppliers, and adjusting its pricing structure to spread the cost burden without alienating customers.

Executives estimate these measures could offset roughly 30% of the tariff hit, but analysts warn that the remaining billions will still erode profitability and cash flow, leaving less room for investment in future technologies like EVs and autonomous vehicles (Axios, Automotive Dive).

The bigger worry for GM isn’t just money – it’s strategy. The company wants to lead the shift to electric vehicles, but new tariffs could take away funds needed for research, development, and battery production. This puts GM at risk of falling behind competitors like Tesla, Toyota, and Chinese EV makers, who have the advantage of local supply chains or government support.

Recalls, Engine Defects & Legal Fallout

Besides, General Motors is confronting one of its most serious quality-control crises in years, as the automaker recalls nearly 600,000 trucks and SUVs (model years 2021–2024) equipped with the 6.2L V8 L87 engine.

The problem comes from weak crankshafts and connecting rods, which could cause the engine to fail suddenly. This can lead to fires or the vehicle losing power while driving at high speeds.

GM says it fixed the engineering problems by June 1, 2024, so 2025 models aren’t affected. Still, the size of the recall shows there are deeper issues with how the company checks and controls its vehicles.

This problem wasn’t small. Federal investigations and consumer complaints showed about 28,000 engine breakdowns, including stalling and fires. These incidents caused 12 minor injuries and a few crashes, drawing more attention from regulators and safety experts.

In response, GM has pledged to conduct free inspections and repairs across affected vehicles. For models that clear safety checks, the company has adopted interim solutions – such as higher-viscosity oil and upgraded engine components – to reduce the risk of breakdowns

Even with these fixes, GM is facing growing legal trouble. A class-action lawsuit in Pennsylvania claims the company didn’t properly fix the problems and knowingly sold cars with serious defects.

Plaintiffs say that even after getting replacement engines, many customers still face the same problems with performance and reliability. This suggests that GM’s recalls, while important, might only fix the surface issues instead of solving deeper engineering and manufacturing problems.

For GM, the financial risks come in two ways: the immediate costs of the recall, which could reach hundreds of millions of dollars, and the long-term hit to consumer trust. Recalls this big are a clear reminder that past safety issues, like the 2014 ignition-switch scandal, still cast a shadow over the company.

Now, once again, GM faces the difficult task of convincing both regulators and consumers that it can uphold the quality and safety standards befitting one of America’s most iconic carmakers.

Data Privacy Lawsuit & Trust Crisis

In mid-2025, GM faced a new legal challenge that could affect both its business and consumer trust. Nebraska sued GM and its OnStar division, claiming the company collected and sold data from over 14 million vehicles without getting proper permission.

According to the complaint, GM funneled sensitive driving information to insurers and brokers, where it was allegedly used to determine premium rates, deny coverage, and even cancel policies – all without drivers’ explicit knowledge.

The lawsuit also accused GM of employing deceptive sales tactics, such as requiring customers to enroll in OnStar just to access certain safety features, effectively coercing participation in data-sharing programs.

This lawsuit does not exist in isolation. It builds on mounting scrutiny from regulators and journalists following a 2024 New York Times exposé, which uncovered troubling details about GM’s “Smart Driver” program and its role in monetizing customer data.

That report forced GM to suspend the program, and soon after, the company entered into a consent agreement with the Federal Trade Commission (FTC), pledging to halt data sales to credit agencies for at least five years.

Although GM said this move was meant to improve transparency, Nebraska’s lawsuit shows regulators remain skeptical. Other state attorneys general might also take action to limit GM’s data practices across the country.

The consequences could go beyond fines. GM has spent years rebuilding trust after past safety scandals, and this lawsuit makes it look like the company puts profit over privacy. With drivers increasingly concerned about how their cars share data, the idea that GM sold personal information without consent could seriously damage its reputation.

Besides hurting its reputation, the lawsuit could be expensive for GM. It may have to spend heavily to comply with new rules, change how it handles data services, and could even slow down the growth of its telematics-based business.