Meet the auto industry’s favorite Republican

May 19, 2011, 7:15 PM UTC

By Anna Palmer, contributor

FORTUNE — Matt Blunt has a big job ahead of him.

As the new head of the American Automotive Policy Council, a lobbying group formed in late 2009 by Chrysler, Ford (F) and General Motors (GM), the former governor of Missouri has a story to tell about America’s beleaguered auto companies: They’re back.

Just a few years ago, executives from the “Big Three” automakers lined up hat-in-hand in Washington and walked away with an $18 billion bailout. It was a dark moment for not only the automakers, but also the GOP, which was working overtime to shield the Bush administration from accusations of lemon socialism.

Today, the worst is over for the US auto industry, Blunt argues. In the 10 years between 1998 and 2008, the U.S. market share for the Big Three declined from 70% to 53%, largely a result of lagging behind overseas competition in quality and innovation. But after slashing jobs and restructuring their businesses, American automakers are finally producing globally competitive products and hiring workers at a faster rate than elsewhere in the country.

Last month Ford reported $2.8 billion, the largest profit the company has seen in 13 years. GM also put up a strong showing, with $3.2 billion in first quarter profits, tripling its profits over a year ago. And Chrysler reported $116 million in first-quarter profit, the first since the company emerged from bankruptcy.

Impressive as these numbers are, U.S. automakers cannot hope to gain credibility on Capitol Hill until they regain their lost prestige on Main Street. And this is where Blunt comes in.

Blunt, who took the helm of AAPC in February, is tasked with lobbying lawmakers and generally being the public face of the Big Three. He can’t be successful without convincing Washington that they are regaining lost market share and mindshare. And he can’t do that unless he pushes the automakers to continue to innovate.

“There’s a myth about American automakers, that they’re bloated, and that’s just not accurate,” Blunt says. “We’re making great products, doing so as efficiently as anybody else in the world.”

The decision to branch out into the domestic agenda didn’t come lightly. For years, Ford, Chrysler and GM have relied on the Auto Alliance, which also includes nine foreign automakers, as its association to lobby Capitol Hill. But with foreign and domestic automakers often at odds over what positions to take on key pieces of legislation, the companies decided to rebrand the Automotive Trade Policy Council, which focused on international trade and economic policies and created AAPC.

Still, Blunt insists that the Alliance and AAPC are working in concert. “I don’t think either organization would feel threatened by the other,” Blunt says.

Auto industry and the GOP: New friends

Blunt, who served as governor from 2005-2009, wasn’t a foregone conclusion to lead the group’s efforts. After all, Congressional Republicans were vocal critics of domestic automakers in 2008 hearings where GOP lawmakers criticized the union work forces. But increasing their ties to GOP lawmakers has become more important since House Republicans took over the majority.

While Blunt doesn’t have a history working in the auto industry, he does bring the cachet of a former governor to the group. The Missourian also notes he worked with the auto industry as part of the state’s economy when he was an elected official. Most importantly, he brings some much-needed Republican firepower since the Detroit automakers have long been seen as close with Michigan Democrats.

Blunt says he can use his GOP credentials to help the automakers make their case on Capitol Hill, but he maintains that AACP remains a bipartisan outfit. Debbie Dingell, wife of Rep. John Dingell (D-MI) and longtime auto exec, remains as a consultant. Jim Doyle, also a Democrat, formerly in charge of the trade group’s international practice, remains a consultant as well.

Blunt’s foray into the auto world couldn’t have come at a better time. After taking dismal projections to lawmakers for several years, Ford, Chrysler and GM finally have something to brag about.

But just as the automakers are trying to get out from under the government’s financial hold, they are facing increased global competition from upstarts like Kia and Hyundai. Even Tesla Motors (TSLA), a California upstart focused on electric vehicles, has gotten the stamp of approval from the Obama administration — it recently received a $465 million loan to build an electric sedan and the battery packs needed to propel it.

The automakers also have significant issues on the domestic front, like trying to find cohesion among their regulators. Blunt said the automakers would like to find a long-term solution on carbon emissions, CAFE standards and fuel economy standards.

But most importantly, Blunt says he is making the case to lawmakers that “this is an industry we can be proud of.”