I have to imagine that, as cars became commodities, everyone's margins were slimmer, but it'd be interesting to see what a company unburdened by retirement obligations looks like over that same time span.
It is incredible how quickly profit margins were eaten away by obligations GM made to its employees. This is evidence to the fact that the unions and their pressure are the main underpinning of GM's demise.
From my subjective observations, the things that are hurting GM the most are rising gas prices (and cars that use too much of it) and unfavorable employment contracts.
Note: I haven't seen the income sheets for GM (at least not one that breaks down the brands), nor have I seen any study that shows the quality of their cars vs. others.
There's a line out the door for the Smart car. How hard would it be for GM (or Ford) to grab one of their little, gas-sipping city cars (like the Ford Ka), and sell it in the US? It's obvious that consumers want them, and it would give American automakers a domestic answer to the Honda Fit and Toyota Yaris.
The interior styling needs to stop being so disjointed; I have yet to sit in any American car and get the feel that people actually cared when they laid out the inside of the car. The Saturn Sky is a great example -- I can't operate the controls on the driver-side door, because they are placed right under the middle of my forearm.
It's even worse in the economy segment -- Ford and Mazda share technology, yet the interior of the Mazda 3 is such a wonderful place to be, whereas the interior of the Focus is just... dreary. The Mazda feels like a downsized BMW, and the Ford feels like... well, a Ford.
Now the bigger difference is when you buy an inexpensive, smaller Toyota or Honda, they are radically different than an inexpensive, smaller Ford or GM car. The styling choices are different. For years Americans associated big and heavy with quality, they always thought the Japanese cars are tinny and flimsy. It really seems like when you buy an inexpensive American car, you get a cheap car but when you buy an inexpensive Japanese car you get a cost reduced version of their nicer cars.
Now they suffer from a branding issue (on top of their other problems). It's like when the original AT&T was split up, and one of the companies to come out of it was GTE. GTE had horrible service and customers hated it. It perennially ranked at the bottom of the baby bells for customer satisfaction, etc. So GTE went and rebuilt it's whole network and suddenly had the best service and support. But when people heard 'GTE' they still thought 'crappy and unreliable'. The solution? They changed their name to Verizon.
So building high quality cars that are stylish and true technical leaders might not be enough. (Especially now that the public associates 'GM' and 'Chrysler' with 'bailout'.) In all this bailing out they might have to change their brand name as well.
It wouldn't help because the fuel-efficiency of imported cars doesn't count for GM's domestic CAFE.
Entire lines of "all American" cars were scrapped in favor of inferior ripoffs of Toyota creations. This continued well into the 2000s; look at cars like the Chevy Aveo, a Korean-made, budget econo-mobile that couldn't hold a candle to the Echo/Yaris' fuel efficiency nor reliability.
Ford was the first one to recover from this and reintroduce big muscle, which in the end was what the American market wanted all along (but couldn't justify).
I do agree on the interior point though. Why is it that I can sit in a Toyota and feel like I'm in a luxurious, well-appointed interior, and then sit in a similarly-priced Ford and feel like I'm sitting in someone's high school science project?
It's probably more of a perceived quality than anything based on numbers that is detrimental to GM.
If GM cars are at par in terms of quality but nobody believes it, that still hurts GM.