GM Q2 profit falls 35%: Tariff hit reaches $1.1 billion, automaker retains full-year forecast lowered in May
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For the quarter ended June 30, GM posted a net profit of $1.89 billion, or $1.91 per share, compared to $2.93 billion, or $2.55 per share, in the same period last year. Stripping out certain items, adjusted earnings stood at $2.53 per share, comfortably beating analyst estimates of $2.34, according to FactSet.
Revenue also slipped marginally to $47.12 billion from $47.97 billion, but still came in higher than Wall Street's forecast of $45.84 billion.
GM shares were down over 3% in premarket trade on Tuesday, AP reported.
CEO Mary Barra, in a letter to shareholders, acknowledged the company's tariff challenges, noting a $1.1 billion net impact from tariffs in the second quarter. She warned that the third quarter could see a higher impact, citing indirect costs related to trade policy. GM expects total gross tariff exposure of $4 billion to $5 billion in 2025.
'Today's announcement underpins our belief in America's innovation in biopharmaceuticals,' Barra wrote, adding, 'We are positioning the business for a profitable, long-term future as we adapt to new trade and tax policies, and a rapidly evolving tech landscape.'
To mitigate the pressure, GM said it is making progress in offsetting at least 30% of its gross tariff exposure through targeted cost initiatives, manufacturing adjustments, and strategic pricing. The automaker had previously announced a $4 billion investment to shift production from Mexico to US plants—its largest domestic manufacturing commitment in recent years.
Barra said the move was aimed at 'greatly reducing our tariff exposure,' and that the company continues to leverage its domestic battery investments and flexible manufacturing footprint to maintain profitability.
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GM also reported electric vehicle (EV) sales of 46,300 units in Q2, up from 31,900 in Q1, even as overall EV market growth in the US shows signs of slowing. The $7,500 EV tax credit under the Inflation Reduction Act is set to expire for many models in September.
'Despite slower EV industry growth, we believe the long-term future is profitable electric vehicle production, and this continues to be our north star,' Barra said, reaffirming GM's EV strategy.
GM maintained its full-year earnings forecast of adjusted EBIT between $10 billion and $12.5 billion, a guidance range lowered in May in anticipation of steep tariff impacts.
The broader auto sector has been under strain due to President Donald Trump's trade policies, which initially imposed 25% tariffs on auto imports. While Trump relaxed some of these duties in April, his administration has ordered a review into further levies on foreign-made vehicles and parts.
According to the Center for Automotive Research, a uniform 25% tariff across all trading partners could cost the US auto industry an additional $107.7 billion, with Detroit's Big Three automakers—GM, Ford and Stellantis—bearing $41.9 billion of that burden.
The report came a day after Stellantis said it expects to post a €2.3 billion ($2.68 billion) net loss in H1 due to tariffs and other charges. Stellantis is scheduled to release its formal results on July 29.
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