Core Viewpoint - General Motors is facing challenges from rising tariffs and significant capital expenditures but maintains a strong free cash flow projection of $7.5 billion to $10 billion for 2025 [1][8] Financial Performance - In the second quarter, General Motors reported adjusted earnings per share of $2.53, exceeding the analyst consensus estimate of $2.40 [4] - Quarterly sales reached $47.12 billion, surpassing the expected $45.57 billion [4] - The company's adjusted EBIT margins fell to 6.4%, impacted by a $1.1 billion tariff headwind [1][4] Future Outlook - The company anticipates a challenging second half of the year, particularly in North America, with expected declines in wholesale volumes and increased tariff burdens [2][5] - General Motors expects a mid-single-digit sequential drop in North American wholesale volumes, translating to an approximate 8% year-over-year decline in the second half of 2025 [5] - The third quarter is projected to carry a heavier gross tariff burden than the second quarter, although mitigating actions are expected to soften the impact [6] Strategic Measures - Bank of America Securities analyst Federico Merendi has reiterated a Buy rating on General Motors, adjusting the price forecast from $65 to $62 [3] - The company has maintained its full-year guidance, with expectations of stronger free cash flow in the second half potentially allowing for share buybacks [6][8] - Despite higher capital expenditures, the relative impact is considered manageable as peers in the industry face similar challenges [7] Market Reaction - GM shares have increased by 8.79%, trading at $53.19 [8]
Tariffs Cloud General Motors' Outlook As Annual Profits Remain At Risk