Brighter Days for GM, Chrysler – and Car Buyers

General Motors and Chrysler are on the road to recovery, gauging by their latest quarterly reports yesterday. But car buyers are going to be the real winners from the slow return to health by these automotive brands – and as other brands continue to feel their oats.

Chrysler reported a first-quarter operating profit and the boosting of its cash reserves, while General Motors revealed that it has repaid $6.7 billion in U.S. government loans ahead of schedule. GM also announced it's ready to hire and rev up production, and launched a new TV campaign (above) featuring chairman and CEO Ed Whitacre.

Both companies, of course, still face huge challenges.

GM has deep-sixed four brands; Chrysler remains on life support until an infusion of spiffed-up products later this year. And they must continue, at least subtly, to acknowledge to consumers that they remain basically wards of the state. Whitacre, for instance, made a show of paying for his flight to Washington yesterday.

Both brands' executives can’t ignore the fact that auto buyers began turning heavily to GM and Chrysler’s archrival, Ford, about a year ago after it became clear that Ford wasn’t going to ask for a federal bailout.

Shares of the U.S. automotive sector are up for grabs as they haven’t been in decades because of last year’s collapse of GM and Chrysler, Toyota’s stumbles this year, and the recession.

Some brands – Ford, of course, but also Nissan, Hyundai and Audi – have stepped into the melee and already have improved their position considerably. A revived GM and Chrysler, as well as a Toyota determined to regain its mojo, will only help goose model selection, incentive levels, deal-making and other factors that really matter to buyers.

The industry is gaining hope that some luster may be returning to auto sales. March saw a significant uptick in sales, and April results are expected to show a continued steady gain in momentum. J.D. Power & Associates also notes gains in consumers' perception of long-term vehicle dependability.

The months ahead promise to bring a real donnybrook for brands trying to get bigger shares of a recovering U.S. auto market. GM and Chrysler are signaling improving health at just the right time.