Strong Q1 Results Overshadowed by Uncertainty
General Motors outperformed Wall Street’s first-quarter expectations, but rising cost risks from auto tariffs have forced the automaker to reassess its full-year 2025 guidance and suspend additional stock buybacks. The company reported adjusted earnings per share of $2.78, ahead of the $2.74 consensus estimate, and revenue of $44.02 billion versus an expected $43.05 billion. Despite solid operational performance, GM cautioned that ongoing tariff developments have created too much uncertainty to maintain its previous outlook.
2025 Guidance Now Deemed Unreliable
GM’s original 2025 guidance projected up to $12.5 billion in net income and up to $13 billion in adjusted automotive free cash flow. However, CFO Paul Jacobson made it clear that those projections excluded tariff impacts and “can’t be relied upon.” While the guidance hasn’t been formally withdrawn, management emphasized it will be updated only when the regulatory picture becomes clearer. Jacobson refrained from quantifying current tariff costs but acknowledged they could lead to material changes in operations and capital allocation.
Tariff Pressures Threaten Margins
The potential impact of former President Donald Trump’s 25% tariff on imported vehicles, effective since April 3, and additional steel, aluminum, and parts tariffs have heightened pressure on U.S. automakers. While some modifications may soften the blow—such as tariff reimbursements on auto parts for up to 3.75% of a car’s value—uncertainty remains. GM estimates it may offset 30% to 50% of North American tariffs but has already taken measures including boosting truck production in Indiana and pausing electric delivery van production in Canada.
Stock Buybacks Paused, Costs Climb
Although GM’s $2 billion accelerated buyback is on track to wrap up in Q2, all future repurchase activity is on hold. The automaker is balancing shareholder returns with rising costs, including a $300 million forex hit tied to the Mexican peso and $400 million in higher expenses related to labor, warranty claims, and depreciation. Compared to Q1 2024, net income fell slightly to $2.78 billion from $2.98 billion, and EBIT dropped to $3.49 billion from $3.87 billion, reflecting margin pressures.
Market Forecast: Cautious Bearish Outlook
Despite beating expectations, GM’s suspension of guidance and buybacks reflects growing caution. Tariff headwinds, uncertain regulatory changes, and higher input costs create a bearish near-term outlook for the stock. Until clearer policy direction emerges, traders should expect volatility and potential further downside risk.
More Information in our Economic Calendar.
