TLDR:
- GM reported Q1 EPS of $2.78 on $44 billion revenue, exceeding analysts’ expectations
- The company postponed its earnings call until Thursday pending Trump’s auto tariff policy updates
- First quarter results likely benefited from “pull-ahead demand” as dealers stocked up before tariff implementation
- GM suspended share repurchases and paused guidance updates due to tariff uncertainty
- Expected policy changes may include no tariff stacking and possible credits for imported parts
General Motors delivered stronger-than-expected first-quarter results Tuesday, but the company’s decision to delay its conference call highlights the uncertainty surrounding President Trump’s auto tariff policies.
The Detroit automaker reported earnings per share of $2.78 and revenue of $44 billion for the first quarter of 2025. These numbers topped Wall Street’s projections of $2.68 EPS on $43.2 billion in sales.
Despite beating expectations, GM postponed its earnings call until Thursday morning. The delay gives management time to assess expected changes to auto tariff policies that President Trump may announce Tuesday.
Chief Financial Officer Paul Jacobson acknowledged that the quarter “undoubtedly benefited from some pull-ahead demand from customers purchasing vehicles ahead of potential tariffs.” In this context, GM’s customers are car dealers who were stocking up inventory before new tariffs take effect.
The strong results come as automakers face a challenging tariff environment. Starting in May, new cars will face a 25% import tariff, with imported parts also subject to a 25% tariff.
Tariff Changes on the Horizon
According to reports, the Trump administration is preparing to announce changes to its auto tariff policies. These modifications could provide some relief to automakers.
Expected changes include preventing “tariff stacking,” which would ensure auto tariffs won’t be affected by other levies related to steel, aluminum, fentanyl, or “reciprocal” tariffs placed on other countries.
Another potential change involves a credit worth 3.75% of a car’s value to help offset the 25% tariff on imported parts. This credit would gradually decrease over time.
While these changes may ease some pressure, GM will still face challenges. The company imports roughly 45% of the cars it sells in the U.S., primarily from Mexico, Canada, and South Korea.
In response to import concerns, GM has increased production at its Fort Wayne, Indiana plant to boost domestic manufacturing capacity.
Financial Outlook Remains Unclear
Given the tariff uncertainty, GM has advised investors not to rely on the guidance provided in January. Previously, the company projected 2025 operating profit between $13.7 billion and $15.7 billion, with expected earnings per share around $11.50.
The company has also paused its share repurchase program until it has more certainty about the trade policy environment.
Despite these challenges, GM’s dividend appears secure. The shares currently yield about 1%, with dividend payments consuming only around $500 million annually compared to projected free cash flow of about $12 billion.
GM’s stock has faced pressure since the November election, falling approximately 12% while major indexes dropped 4-5% in the same period.
Options markets suggest shares could move about 6% following the earnings announcement. In the past four quarterly reports, GM stock has moved approximately 7%, rising twice and falling twice.
Shares were down 2.5% shortly after Tuesday’s report, entering the day down just over 10% since the start of the year.
Analysts’ opinions on tariff impacts vary widely, with estimated hits to operating income ranging from 30% to 100%. The upcoming policy clarifications should help narrow these projections.
One analyst, James Picariello, wrote that “if and when the industry sees some form of North American certainty, we believe GM is ripe for substantial upside.”
GM’s first quarter sales were strong across all vehicle brands, with the company reporting its best first-quarter sales in seven years earlier this month.
The automaker’s year-over-year numbers show the business remains solid despite challenges. Last year, GM reported an operating profit of $3.9 billion and EPS of $2.62 from sales of $43 billion.
The coming days will be critical for GM as investors await clarity on trade policies that could shape the company’s performance for the rest of 2025.
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