Strong sales in the U.S. and China helped the 103-year-old carmaker turn a profit of $7.6 billion, beating its old record of $6.7 billion in 1997 during the pickup truck and SUV boom.
GM is a vastly different company than it was back then. It's smaller, has less debt and its contract with the United Auto Workers is less costly. But it took a government bailout and a trip through bankruptcy protection in 2009 to cut its bloated costs. The company made record money last year even though U.S. auto sales were near historic lows at 12.8 million cars and trucks.
But problems surfaced in its 2011 results. GM lost $747 million before taxes in Europe, and its South American operations lost $122 million. Sales growth slowed in the U.S. in the fourth quarter, even as more Americans bought cars and trucks.
Also, GM's fourth-quarter profit fell 8 percent and results missed Wall Street expectations.
GM's stock price fell 8 cents, or 0.3 percent, to $24.85 in premarket trading.
The U.S. government still owns 26.5 percent of the company and is waiting for the share price to rise before selling in an effort to recoup the bailout money.
Last year, GM made the bulk of its income in North America, where its pretax profit totaled $7.2 billion. International Operations, which includes Asia, made $1.9 billion before taxes, but that was down.
During the year, GM's global sales rose 7.6 percent to 9.03 million vehicles to help it reclaim the title of world's largest automaker from Toyota Motor Corp.
"We will build on these results as we bring more new cars, crossovers and trucks to market," CEO Daniel Akerson said.
This year, GM expects to increase its revenue as global auto sales grow and it charges more for models. However, it will make less money per vehicle as the mix of sales continues to shift to cars from trucks, which have bigger sticker prices. It also expects to invest $8 billion on new products and technology, and says pension expenses will rise. The company wants to keep expenses down by freezing its underfunded U.S. pension plan for salaried workers.
Chief Financial Officer Dan Ammann said the company's restructuring in Europe cut pretax losses by more than $1 billion from 2010, but it didn't go far enough.
He hinted that GM will have to cut factories and jobs in the region, saying the whole auto industry has too many factories there.
"We clearly have work to do in Europe, we have work to do with the South American business," he said.
The 2011 profit of $4.58 per share was 62 percent higher than a year earlier. Full-year revenue rose 11 percent to $150 billion.
GM said 47,500 blue-collar workers in the U.S. will get $7,000 profit-sharing checks in March. The checks are based on North American performance and are a record for the company.
The company has placed Vice Chairman Steve Girsky in charge of the European management board and is adding executives in preparation for restructuring. Factory closures and layoffs are likely but could provoke a fight with powerful labor unions.
Girsky has said GM intends to fix the European unit, made up of the Opel and Vauxhall brands, and keep it in the company. GM came close to selling the unit in 2009.