GM Earnings: Tariffs Take $1.1 Billion from Second-Quarter Profit

Key Morningstar Metrics for General Motors

• Fair Value Estimate: $77.00
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: High

What We Thought of General Motors’ Earnings

General Motors’ GM second-quarter adjusted diluted EPS of $2.53 beat the $2.44 LSEG consensus, but the stock fell over 7% during July 22 trading. The company maintained its 2025 guidance given on May 1, but it said profits will be lower in the second half than in the first.

Why it matters: We think the stock falling so much on July 22 is unjustified, given that GM did not cut guidance and announced it resumed open market share repurchases with more tariff policy visibility. We think it’s possible the market hoped for a guidance increase.

• Total company adjusted EBIT fell 31.6% year over year to $3 billion as a $500 million favorable mix tailwind from more light truck share was offset by lower wholesales, cost headwinds from tariffs, and a $600 million electric vehicle inventory write-down.
• Pricing was a slight headwind for the quarter, which was disappointing, given GM’s light truck demand and much lower incentives as a percent of average transaction price than the industry average. The weakness came from fleet sales, but GM still expects pricing up in 2025 from 2024.

The bottom line: We maintain our no-moat rating and increase our GM fair value estimate to $77 per share from $75. The change is from a lower share count after increasing our 2025 buyback spending to $3.0 billion from $2.2 billion and higher equity income as GM China keeps improving.

• GM China equity income improved to $71 million versus a $104 million loss in the prior year’s quarter. This is the third straight quarter of GM China profit, and management reiterated it expects full-year profitability.

Coming up: Second-half 2025 adjusted EBIT should be lower than the first half’s $6.5 billion due to two quarters with tariff impact, less wholesales on summer shutdowns, spending for next-generation full-size pickup trucks, and increasing US capacity at three plants starting in early 2027.