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DETROIT — General Motors (GM) has surpassed Wall Street’s expectations for the first quarter, but the company is now reevaluating its financial forecast for 2025 and halting further stock buybacks due to anticipated cost increases and uncertainties in the automotive industry related to Donald Trump’s ongoing tariffs.
Here’s a summary of GM’s first-quarter performance against average estimates compiled by LSEG:
Earnings per share: $2.78 adjusted vs. $2.74 expected
Revenue: $44.02 billion vs. $43.05 billion
GM’s 2025 guidance released in January did not account for tariffs, projecting a net income of $11.2 billion to $12.5 billion, or $11 to $12 in earnings per share; adjusted earnings before interest and taxes between $13.7 billion to $15.7 billion, equating to $11 to $12 adjusted EPS; and a forecast for adjusted automotive free cash flow of $11 billion to $13 billion.
During a media call, GM CFO Paul Jacobson expressed caution, stating, “We believe the future impacts of tariffs could be significant, so we are reassessing our guidance and look forward to sharing more when we have greater clarity. The prior guidance cannot be relied upon, and we’ll return to the market once we have further insights.”
While GM is not officially withdrawing its guidance, it is labeling it as unreliable until there is more information on the economic and regulatory landscape.
Jacobson refrained from revealing the financial impact of the tariffs, particularly the 25% charge on imported vehicles that took effect on April 3. He also did not outline any specific strategies to mitigate these costs ahead of the company’s postponed investor call, now rescheduled for 8:30 a.m. ET Thursday due to prospective regulatory developments.
There may be some relief on the horizon regarding Trump’s tariffs. According to The Wall Street Journal, the administration is likely to ease the burden of automotive tariffs, avoiding the stacking of duties on foreign vehicles alongside existing steel and aluminum tariffs.
The report also notes modifications to tariffs on imported auto parts, which could allow automakers to reclaim tariffs up to 3.75% of the value of a U.S.-made vehicle for the first year, decreasing to 2.5% in the second year before phasing out.
Jacobson indicated GM continues to explore ways to offset between 30% and 50% of the North American tariffs, a position that remains in flux pending further developments.
The uncertainty created by Trump’s tariffs, including supplementary duties on aluminum and steel, as well as potential levies on auto parts slated for May 3, has led to increased apprehension within the automotive sector. This instability has prompted analysts on Wall Street to downgrade numerous automotive stocks, GM included.
GM’s manufacturing plans are poised for minimal adjustments until there’s “more clarity” regarding the tariffs. Nevertheless, some “no regrets” modifications have already been implemented in response to the current environment, including ramping up pickup truck production in Indiana, minimizing downtime in Missouri, and halting the production of large electric vehicle delivery vans in Canada.
“Future decisions regarding capital needs or major shifts will be postponed until we have a clearer understanding,” Jacobson stated, adding that the tariffs might necessitate significant investments by the company or its partners in the U.S.
In the first quarter, GM reported a net income attributable to stockholders of $2.78 billion, along with adjusted earnings before interest and taxes totaling $3.49 billion. This compares to the previous year’s revenue of $43.01 billion, net income of $2.98 billion, and adjusted earnings before interest and taxes of $3.87 billion.
Despite a decline in profit margins compared to last year, Jacobson characterized GM’s first-quarter outcomes as “very strong,” highlighting solid operational fundamentals. He mentioned a $300 million negative impact from foreign exchange fluctuations, specifically the Mexican peso, and an additional $400 million in costs year-over-year due to factors like increased labor expenses and depreciation.
As for future stock buybacks, which GM has utilized to support its share price, Jacobson confirmed that the company’s $2 billion accelerated stock buyback program is on track to complete by the second quarter, but all future repurchases will be put on hold.
In February, GM announced a $6 billion share repurchase initiative aimed at rewarding investors amid a backdrop of slowing industry sales and profits, which includes the $2 billion accelerated buyback program.
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