A little over a decade ago, General Motors (GM 1.20%) had just emerged from bankruptcy and was far from a top automotive stock to buy.

It restructured its business because it was making cars people didn't want, it was slow to innovate because of its size and overburdening bureaucracy, and it wasn't ready to adapt for the future -- and the financial crisis, and large losses from GM Financial, sealed its fate.

Fast forward to 2023, and the company has turned all of those weaknesses into strengths, and it might just be a top automotive stock to buy for the following reasons.

1. Strong demand returns

Gone are the days when GM had to dish out heavy incentives and deals to move undesirable vehicles off dealership lots. GM has started 2023 on the right foot, and its significant success in full-size trucks and larger SUVs is helping drive strong cash flow and profits for the company. 

GM sold over 600,000 vehicles in the U.S. alone during the first quarter, up 18% compared to the prior year. It wasn't only sales that started strong; four brands ranked in the top three for customer service satisfaction per J.D. Power Customer Service Index Study, and 12 vehicles ranked in the top three for dependability per J.D. Power's Vehicle Dependability Study.

Even better, GM has now ranked first in loyalty to the manufacturer for eight consecutive years per S&P Global Mobility -- which means that not only are consumers buying its vehicles, they're staying with GM for additional purchases.

One reason for GM's downfall over a decade ago was that it simply wasn't producing vehicles consumers wanted to buy. It's clear that weakness has turned into a strength.

2. Bigger isn't always better

Automakers found out quickly that bigger isn't always better. A lean and flexible operation can respond more effectively to quickly changing markets and consumer preferences. GM's progress on electric vehicles (EVs) is an example of responding at the right time to changing consumer tastes.

In fact, 2023 might prove to be a breakout year for the Detroit automaker in terms of EVs. It sold over 20,000 EVs in the U.S. during the first quarter, and it's on track to manufacture over 50,000 EVs in North America through June and then double that during the second half of the year.

Its Cadillac LYRIQ deliveries are accelerating rapidly this year, it's building and shipping the GMC Hummer EV pickup and SUV version, and the Chevrolet Silverado EV Work Truck deliveries start in late spring.

Assuming GM has properly gauged the demand for its EVs, ramping up production to that level will be a large part of building the scale it needs to turn its EV program into profitability -- which it expects to do by 2025.

3. Thinking toward the future

BrightDrop, a wholly owned subsidiary of GM, was launched in 2021 and is designed to deliver commercial EV vans to companies focused on delivering to consumers.

In the short time since its launch, BrightDrop has inked more than 30 commercial customers across multiple industries, including retail, rental, and parcel delivery, among others. Some of its big-name deals are with companies such as Walmart, FedEx, Hertz, and DHL Express.

BrightDrop is on track to reach $1 billion in revenue this year and anticipates generating up to $10 billion by the end of the decade at 20% profit margins.

Beyond the additional revenue BrightDrop offers the company and its investors, it's also proof that GM is a leaner and more flexible operation. BrightDrop's Zevo 600 van completed its first production build in just 20 months, making it the fastest vehicle to market in GM's history.

The section could end there, but it would be a mistake not to mention Cruise, GM's autonomous driving technology subsidiary. My colleague believes Cruise could even be the most valuable part of General Motors in a decade. Cruise is expanding its driverless programs into new markets; management believes Cruise can generate revenue of $1 billion by 2025 and targets $50 billion annually by 2030. It's a lofty goal, especially when a crosstown rival made a completely different decision with its autonomous program. But if it pays off, investors will be rewarded. 

The bottom line

Many things have changed for the better at General Motors, and many of the reasons the company collapsed a little over a decade ago are now core strengths for the automaker.

It's producing vehicles people want to buy, and those consumers are coming back for additional purchases more often. Management is better anticipating changes in consumer preferences and proving it with quick progress on its EV program. And best of all, it's looking to the future with businesses like BrightDrop and Cruise that will quickly add billions in revenue.

GM isn't the company it once was, and at a meager price-to-earnings ratio of 5.6, that's a great opportunity for investors.