GM Earnings on Deck: Can Sales Momentum Offset Tariff Headwinds?

General Motors (GM) is set to unveil its second-quarter 2025 earnings before the market opens today, July 22nd, hot on the heels of strong Q2 sales figures, but also follows a revised, more cautious, full-year earnings guidance issued earlier this year.

Analysts estimate earnings per share (EPS) of $2.48 and revenue of $46 billion for the quarter, a 4% decline in sales Y/Y. Whilst GM's stock has rallied ~25% off April's low, the YTD gain of 3.5% lags the S&P 500‘s 7.45% gain by half, with tariff's still leading into uncertainty in the outlook.

In July, GM reported a robust 7.3% surge in U.S. sales, reaching 746,588 units for the second quarter. This impressive growth positioned GM as the industry leader in both total and retail sales for the first half of the year, significantly outpacing the estimated 4% growth for the overall U.S. automotive market.

Duncan Aldred, GM's SVP and President of North America, attributed this success to strategic investments in a diverse portfolio of vehicles, including crossovers, SUVs, and pickups, encompassing both gasoline and electric powertrains. Aldred emphasized the crucial role of efficient execution by GM's employees, suppliers, and dealer network in driving this growth.

GM's performance in China also provided a bright spot. Deliveries in the world's largest auto market exceeded 447,000 units in Q2, marking a notable 20% year-over-year increase. This represents the second consecutive quarter of sales growth in China, signaling a potential recovery in a market that has experienced fluctuating demand in recent years. The growth in China is particularly important as it provides diversification to GM's revenue streams and offsets potential weakness in other regions.

However, the positive sales figures are tempered by concerns surrounding GM's revised financial guidance. During its Q1 earnings conference call, the company initially projected a full-year 2025 EPS of $11.00-$12.00. However, in May, the automaker adjusted its outlook, citing an expected $4 billion to $5 billion hit from tariffs.

This led to a revised EPS guidance of $8.25-$10.00, significantly below the initial forecast. The consensus EPS estimate, which stood at $10.99 at the time of the initial guidance, has since fallen to $9.26, reflecting the market's response to the revised outlook. The company also revised its FY25 EBIT-adjusted view to $10B-$12.5B, with capital expenditures remaining in the range of $10B-$11B.