Detroit's back -- or so it seems. Ford (NYSE: F) is posting big profits, and Chrysler just paid back the government. Meanwhile, Toyota (NYSE: TM) and Honda (NYSE: HMC) are still struggling to get it together in the wake of the the Japanese earthquake.

So why do I think General Motors (NYSE: GM) will look like it's floundering for a while longer? My Foolish colleague Shubh Datta recently opined that GM would ride high in 2011, but I disagree. I think GM shareholders (full disclosure: I'm one) will have to be patient for longer than that, because the General's facing a couple of headwinds that will likely drag on earnings for a while.

The products, they aren't a-changing
GM's product development efforts slowed down greatly during the company's death spiral and bankruptcy, and several key programs were reportedly substantially reworked after the bankruptcy by the company's new management. While there are bright spots in GM's current product portfolio, the company is at least a couple of years away from being able to keep up with the new-product cadence at standard-setters Ford and Hyundai (OTC: HYMTF).

Witness the company's full-size trucks, arguably (still) its most important products. GM's big trucks aren't bad, but Ford's lineup -- refreshed last year and sporting new fuel-efficient powertrains -- shines in comparison. GM's pickups (and their big SUV cousins like the Chevy Tahoe and Suburban) need an update to stay competitive, but it's at least a couple of years away. 

Meanwhile, inventories have bloated. GM had 111 days' worth of pickups in inventory at the end of April, a big number that may drive the company to bump incentives -- an old habit it would dearly love to break.

And that's the problem: GM has some impressive new products, but many of its entries aren't quite competitive with the class leaders. In order to keep the metal moving while GM waits for fresh products, it'll have to stay aggressive on pricing and free-handed with the incentives. That will continue to squeeze per-sale profits, especially in North America, which will continue to drag on the stock price.

What if your biggest growth source isn't growing?
China has been an exceptionally bright spot for General Motors, where the company has grabbed first place as the world's biggest vehicle market has enjoyed enormous growth. While GM's per-sale profits in China aren't close to what they are in the U.S., thanks to brutal competition and the need to split earnings with joint venture partners, China has still been a vitally important source of growth (and prestige) for the General.

But now comes word that that growth may be slowing, or going away altogether: A new report from the China Automotive Technology and Research Center predicts that auto sales in China may actually fall this year, possibly by as much as 10%. Several government stimulus programs have come to an end, and new measures meant to fight traffic congestion in major cities may discourage new buyers from taking the plunge.

GM's established position, and the prominence of its Buick and Chevrolet brands, suggest that it will fare better than some of its competitors, particularly lower-cost domestic producers like Berkshire Hathaway (NYSE: BRK-B) investment BYD (OTC: BYDDY). Observers predict that the decline will hit the lower end of China's market the hardest. But investors hoping that GM's Chinese operation would help drive growth while the company got its act together in other markets may be disappointed.

Still a turnaround in progress
Here's what GM investors (and potential investors) need to keep in mind: Even though the General's posting decent profits, has minimal debt, and is likely to regain the global sales crown in 2011, this is very much a turnaround story still in progress. The bailout and warp-speed bankruptcy proceeding cleaned up GM's financial statements nicely, but cleaning up the business is another matter.

While GM's latest products inspire confidence in the company's ability to execute -- that, more than anything else, is why I like GM as an investment -- it needs more new products. CEO Dan Akerson has pushed hard to accelerate new-product programs, but doing so means sustaining a high level of spending. And that, plus the pricing and incentives needed to keep existing products moving, plus the pressures of higher gas prices that continue to drive consumers toward lower-margin small cars, means that GM's profits may seem subdued for several more quarters.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.