General Motors (GM) witnessed a notable uptick in its stock after announcing mixed third-quarter earnings, along with an optimistic revision to its full-year profit forecast. The automaker is navigating the complexities posed by President Trump’s auto tariffs as it continues to assert its dominance among the Detroit Three.
The updated earnings before interest and taxes (EBIT) projection for GM now ranges from $12.0 billion to $13.0 billion, up from its previous estimate of $10 billion to $12.5 billion. In addition, GM has revised its adjusted automotive free cash flow target to between $10.0 billion and $11.0 billion, a significant increase from the earlier forecast of $7.5 billion to $10 billion. The adjusted earnings per share (EPS) is also expected to rise to between $9.75 and $10.50 diluted, compared to the previous range of $8.25 to $10.00.
The automaker indicated that its total exposure to tariffs for the year is now forecasted to be approximately $3.5 billion to $4.5 billion, assuming that current levy rates and indirect costs from suppliers remain consistent. In the spring, GM had cautioned investors about a potential $4 billion to $5 billion impact from auto tariffs, highlighting the challenging environment it continues to face.
In a reflection of GM’s positive momentum, CEO Mary Barra communicated optimism in her shareholder letter, stating, “Based on our performance, we are raising our full-year guidance, underscoring our confidence in the company’s trajectory.” She also expressed gratitude to the President and his administration for the recent tariff updates, particularly highlighting the MSRP offset program, which is designed to enhance the competitiveness of U.S.-produced vehicles over the next five years.
Additionally, GM anticipates that ongoing tariff mitigations will counteract approximately 35% of the costs, facilitated by a lower tariff base. The third-quarter results showed GM reporting net revenues of $44.26 billion, slightly below the projected $45.18 billion, yet surpassing the expected adjusted EPS of $2.80 versus the $2.27 forecasted. Adjusted EBIT for the quarter reached $3.376 billion, exceeding the $2.72 billion estimate.
On the sales front, GM reported that its tariff costs for the third quarter amounted to $1.1 billion after mitigation efforts. The company maintained a disciplined approach regarding incentives, offering an average of only 4% off the average transaction price (ATP), which is notably lower than the industry average of 6.9%.
In terms of sales volume, GM achieved a significant milestone with Q3 sales hitting 710,347 units, marking an 8% increase compared to the previous year. The automaker reclaimed its position as the top seller in the U.S., achieving its highest market share since 2017. The surge in sales was largely driven by popular gas-powered vehicles, including pickup trucks like the Chevrolet Silverado and full-size SUVs such as the GMC Yukon, which GM predicts will continue to lead in the industry by year’s end.
Moreover, GM’s electric vehicle (EV) sales saw a remarkable increase in Q3, hitting a record of 66,501 units sold in anticipation of the forthcoming expiration of the $7,500 federal EV tax credit. This growth reinforces GM’s commitment to expanding its EV lineup and meeting the evolving preferences of consumers.
Overall, GM’s improved guidance and robust sales figures position the automaker favorably as it continues to adapt to the challenges of the current automotive landscape while embracing future opportunities.