They're doing well now because consumer demand has propped back up due to improvements in the macro-economy. They needed a bailout because the macro-economy had tanked. If they had structural problems before that which made them more susceptible to the broader economic downturn, then the government needed to step in and fix them, assuming private investors would not. They needed to do this for one basic reason - too many people's jobs depended on it. If they're all out of work, they go on unemployment, an automatic increase in government spending and decrease in tax revenue, then their demand for consumer goods and services goes down, putting more people out of work.
I don't see any scenario where letting GM and Chrysler go out of business is better for the American economy. The market is a tool, a means to an end, not an end in and of itself. It's a system for distributing resources, like any economic system. It isn't God. We've had a mixed economy for a long time now and we're doing pretty well, relatively speaking. The current status of these companies is a product of market forces and some government intervention working in concert.
The Volt is proof of concept. You can find statements from GM going back 4 years stating that they knew it would lose money for many years. Yet GM is doing fantastically well right now. The point of the Volt is to position them in a market that will expand in the future. They never expected to profit from its early generations.
- wolf