General Motors reports a 35% profit drop as tariffs weigh on car industry
GM's results released on Tuesday still topped analyst estimates, but the US carmaker cautioned that profits in the second half of 2025 would be lower than in the first. list of 4 items list 1 of 4 list 2 of 4 list 3 of 4 list 4 of 4 end of list
The company pointed to sales growth in North America, where new and revamped trucks and sport utility vehicles sold briskly with solid pricing. GM was among the carmakers that benefitted from a surge in demand this spring from consumers who wanted to beat the US tariffs and their higher prices.
Profits overall fell 35.4 percent to $1.9bn year-on-year while revenues dipped 1.8 percent to $47.1bn.
The US imposed 25 percent tariffs on imported finished cars in early April, a move that affected major GM manufacturing operations in Mexico, Canada and South Korea. Car companies have also faced tariffs on imported steel, aluminium and auto parts.
The tariff hit in the second quarter reflected that there were 'minimal mitigation offsets', GM said in a slide presentation.
The Detroit, Michigan-based company's outlook for a weaker second half of 2025 reflects 'seasonally lower' volumes, increased spending on vehicle launches and the presence of two quarters with a tariff hit compared with just one in the first half of the year.
GM expected annual operating income of $10bn to $12.5bn after notching $6.5bn in the first half of the year.
Chief Financial Officer Paul Jacobson described the hit to profitability in the first quarter as 'the peak of the tariff impact for us', telling CNBC in an interview that mitigation efforts should enable a partial recovery in profit margins later in the year. Shifting manufacturing
GM expected to mitigate 'at least' 30 percent of the tariff hit through 'manufacturing adjustments, targeted cost initiatives and consistent pricing', according to a slide.
Jacobson said it would take 18 to 24 months to implement capital projects to adjust GM's manufacturing footprint.
In June, GM announced spending of $4bn over two years to expand production at plants in Michigan, Kansas and Tennessee, making use of unused capacity in its home market as President Donald Trump's tariffs penalise imports of finished vehicles.
The June announcement included steps to produce the Chevrolet Equinox and Chevrolet Blazer in the US. The two vehicles are currently assembled in Mexico.
GM has so far not shifted manufacturing from South Korea, home to production for the Chevrolet Trax, a popular compact SUV that is priced affordably.
Jacobson told CNBC the Trax has stayed profitable even with the hit from the tariff on imported autos.
'We haven't made any long-term decisions about Korea yet, mainly because there is a lot of uncertainty about that,' Jacobson said.
Trump has set an August 1 deadline to reach broad trade deals with numerous countries, including South Korea, which faces a 25 percent tariff if there is no deal.
'We're optimistic that the US and Korea can find common ground,' Jacobson said. 'We know the auto industry is important to both sides in those conversations.'
GM's stock tumbled on the lacklustre earnings report. It is down 6.6 percent for the day as of 11:30am in New York (15:30 GMT).
GM's newly reported hit comes a day after carmaker Stellantis announced it expected a $2.7bn loss in the first six months of the year because of Trump's imposed tariffs. Stellantis, the owner of brands including Fiat and Jeep, will disclose its final results for the first half of the year on July 29.
Stellantis stock is down 0.3 percent since the market opened on Tuesday and had increased more than 2.4 percent over the past five days.
Source: News Agencies
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