Michigan Gov. Gretchen Whitmer, donning a yellow safety vest and goggles, celebrated a ribbon-cutting at a once-imperiled factory this week in Lansing, Mich.

General Motors had scrapped its plans for the electric-vehicle battery plant, built with LG Energy Solution, and sold its stake in 2024.

Now, the factory was starting production after Toyota agreed to shift a $1.5 billion order there.

It wasn't lost on the crowd that batteries made at the plant would go to a Japanese rival, not hometown hero GM. When she was asked, Whitmer demurred: "My goal is always to make sure the investment happens here," she said. "And that it ultimately produces good-paying jobs."

Twenty years ago, GM sold twice as many cars and trucks in the U.S. as Toyota. Today that lead has dwindled to just over 100,000 vehicles through July. Toyota is quickly closing the sales gap with GM, threatening to end the American auto giant's nearly 100-year reign atop the U.S. auto market.

Even as the entire new-car market shrinks, GM stands out for selling fewer vehicles, following a strategic decision to kill off traditional sedans and hold the line on profits rather than chase volume with deals and discounts. The result is that the company is making more money and winning over Wall Street.

Toyota, meanwhile, is pumping out a string of new models, capitalizing on surging demand for hybrids, and investing billions to expand American production in places like Texas and Kentucky-pivots that come as the company faces more stagnant car markets abroad. The company-the world's largest automaker by sales-is roughly twice as profitable as GM and recently raised its annual earnings forecast, saying it will benefit from a weaker yen and smaller impact from the Iran war.

Both automakers say that market share is only one metric when it comes to how they measure success. A GM spokesman said it also has vehicles in short supply that have constrained sales. Both Toyota and GM have each sold about 1.5 million vehicles this year.

The companies chase different types of consumers: Toyota appeals more to eco-conscious car buyers and those who prioritize reliability and efficiency. GM wins among truck buyers seeking roominess and brawn, and American-brand loyalists.

But the difference in strategic approach right now is seen in sales of GM's Silverado pickup: The brawny Silverado typically tops $50,000 in sales price but is the second-best-selling vehicle in the U.S. and hugely profitable.

Toyota, by contrast, notched double-digit increases this year in Corolla and Camry sales, models that start at $24,000 and $30,000, respectively. They deliver thinner margins, but capture a corner of the market GM left.

A key question now facing GM is whether Chief Executive Mary Barra can sustain the high-margin model she spent years building as GM's factories are increasingly underused and Toyota, along with other foreign rivals, pursue aggressive growth.

"It took 50 years, but maybe the naysayers were correct that Toyota is going to take over the U.S. market," said Charlie Chesbrough, senior economist at Cox Automotive.

Chesbrough generated headlines this summer with a prediction that Toyota could soon pass GM. "There is certainly a lot of pride involved-the idea that an American company ought to lead the American market," he said.

The only time Toyota briefly dethroned GM as America's top-selling automaker was 2021, a temporary blip GM attributed to pandemic supply-chain bottlenecks and the global microchip crisis, which limited the supply of some of GM's models.

Now, if not for the fact that the newest version of Toyota's RAV4 is in severe short supply, GM might have slipped into second already, Chesbrough said.

GM's balance sheet is on a different trajectory. The company is on track for near-record operating profits this year. Its share price is up 50% from a year ago, trading at record highs.

"Structurally, GM is much more sound than I think it's ever been historically," GM finance chief Paul Jacobson said in a recent podcast.

Cobbled together in the early 1900s through a roll-up of disparate car companies, GM at its height controlled more than half of the U.S. market.

GM executives-and the broader industry-were long fixated on that market share.

"It was scrutinized monthly," said Mark LaNeve, a former executive who headed GM's sales operations before its 2009 bankruptcy and later held the same job at Ford Motor. "I'd do these monthly calls to report sales and the stock would go up and down in real time."

That growth came at a cost. GM often relied on deep discounts and cheap loans to sell unpopular cars. It offloaded bare-bones models into rental fleets, sapping resale values. Its multitude of brands like Pontiac and Saturn-reflective of the company's longtime "a car for every purse and purpose" philosophy-sapped the bottom line.

Things changed as GM tumbled into bankruptcy amid the 2008-09 financial crisis. Humbled executives vowed a different path.

Barra, CEO since 2014, has drawn a hard line on money-losing ventures, from budget sedans and its now-shuttered robotaxi business to beleaguered international units in markets like Europe and India. She is also focused on streamlining operations, developing connected and self-driving technology and building out lucrative subscription services. The moves have improved margins. The company still caters to budget buyers with a line of subcompact SUVs, but builds them in South Korea where the company is able to eke out a profit.

The company's ambitious EV push stumbled as tax incentives and pro-electric regulations vanished in President Trump's second term. But because GM's EVs were largely high-margin trucks and luxury models, they have mostly survived despite slow sales.

GM's strategy is getting tested as U.S. industry vehicle sales stagnate amid historically high vehicle prices and economic uncertainty.

The automaker has laid off thousands of factory workers since last year and its factory utilization rate-an important factor for profitability-has declined to 73% this year from 78.5% in 2024, according to consulting firm AutoForecast Solutions. Typically, manufacturers aim for utilization around 80% to 85%. (Toyota sits at 91.9%.)

GM said its capacity use will improve as it adds new models and reshores more production in the face of tariffs, which cost it $3.1 billion last year.

Toyota's strategy of bringing more models and production to the U.S. reflects its own challenges. Its market share in once-lucrative China is falling, leaving it to look elsewhere for growth. It lacks the assortment of heavy trucks that sustain GM's bottom line, although Toyota's hybrid-heavy lineup continues to pay off amid high gas prices. Then in its last fiscal year, the Trump administration's tariffs resulted in a $9 billion profit hit. Even still, Toyota has continued to deliver solid profits.

"If GM no longer really wants to be the biggest player, selling fewer things at a higher margin is a perfectly legitimate strategy," said Erik Gordon, a professor of entrepreneurial studies at the University of Michigan Ross School of Business. "It's a little bit sad for the U.S. industry, but it might be the right thing for the company."