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General Motors (NYSE: GM) released its Q1 2025 earnings today. While the Detroit auto giant posted better-than-expected earnings for the quarter, it held back its 2025 guidance, citing tariff uncertainty. GM also put its share buyback program for hold.
General Motors reported revenues of $44.02 billion in the quarter, which were 2.3% higher YoY and ahead of the $43.05 billion that analysts were modelling. The company’s adjusted pre-tax earnings fell 9.8% to $3.49 billion. Its adjusted EPS, however, rose 6% YoY to $2.78 and was slightly ahead of the $2.74 that analysts were expecting.
GM Holds Back 2025 Guidance
GM meanwhile held back its 2025 earnings guidance amid the tariff uncertainty. During their Q4 2024 earnings call, GM said that expects to post adjusted pre-tax earnings between $13.7 billion-$15.7 billion in 2025 as compared to $14.9 billion last year. The company however said that the guidance did not bake in impact from the tariffs.
“We believe the future impacts of tariffs could be significant, so we are reassessing our guidance and look forward to sharing more when we have greater clarity,” said GM CFO Paul Jacobson. He added, “The prior guidance can’t be relied upon, and we’ll come back to the market with clarity as soon as we have it.”
President Donald Trump has slapped a 25% tariff on vehicle imports, and a similar tariff on imports of parts is set to kick in from May 2. However, the administration has dropped hints that the President is looking to relax these tariffs.
“President Trump is building an important partnership with both the domestic automakers and our great American workers,” said Commerce Secretary Howard Lutnick in the statement. GM incidentally postponed its earnings call to May 1 amid reports of tariff relief.
Recession Odds Rise
To be sure, GM is not the only company that’s held back its guidance and several other companies are also choosing to do so given the uncertainty over the tariffs. Economists have raised their odds of a US recession in 2025 amid the tariff chaos.
“With the uncertainty created by the tariffs, we need to start pricing at least a probability of a US recession,” said Johanna Kyrklund, chief investment officer at Schroders Plc. Speaking with Bloomberg TV, she added, “As we analyze each company stock-by-stock, we’re looking for that risk to growth.”
GM Puts Buybacks on Hold
Coming back to GM, the company also put its buyback plan on hold. “We have temporarily suspended any buyback activity until we have more clarity on what the situation might be,” said Jacobson.
He added, “As far as capital spending goes, we continue to evaluate and position where we might want to go with that, and we’ve got some flexibility in the portfolio, but to date, we haven’t made any material changes to our capital expenditure program, but we’ll continue to assess that as we get more clarity.”
Notably, in February, GM authorized a $6 billion share buyback and also raised its quarterly dividend. It was the third mega share buyback authorization from GM in less than two years. It announced a $10 billion accelerated share buyback plan in November 2023 and authorized yet another $6 billion repurchase plan in June 2024.
Thanks to these massive buybacks, GM managed to lower its outstanding share count to below 1 billion in the final quarter of 2024, which was ahead of its schedule.
General Motors’ Capital Allocation Policy
General Motors has been quite prudent with capital allocation and has additionally been looking to cut down on its losing bets. In December, GM announced that it would exit the Cruise robotaxi business and would instead focus on autonomous driving for personal vehicles. GM’s robotaxi business was burning a lot of cash, while the competition in the industry is set to intensify with Tesla launching its Cybercab. The exit from the robotaxi business would help GM save over $1 billion annually.
Auto Tariffs To Hit GM and Ford
The automotive industry in North America is quite integrated and the tariffs are disruptive for US auto majors. Notably, Canada, Mexico, and the US were covered under the NAFTA (North America Free Trade Agreement) which Trump renegotiated in his first tenure. In July 2020, the USMCA (United States-Mexico-Canada Agreement) replaced the NAFTA which had come into effect in 1994. The USMCA is also scheduled for a review in July 2026.
For years, the US automotive industry benefited from lower production costs in Mexico, and global auto giants set up plants in that country. The tariffs are, however, set to negatively impact companies like Ford, GM, and Volkswagen as they all have manufacturing footprints in Mexico and Canada.
GM, meanwhile, is more exposed to the tariffs than Ford, as apart from importing parts and vehicles from Mexico and Canada, it also imports finished cars from South Korea and China into the US.
UBS, for instance, estimates that the cost of cars that GM imports from Canada and Mexico would rise by $4,300 after the tariffs. For cars imported from Korea and China, the brokerage estimates the costs to rise by $6,250 per car.
UBS estimates that the total tariff cost for GM will be around $5 billion, but expects it to recover half of it through pricing.
Meanwhile, GM stock opened around 2% lower today while the Dow Jones is flat at the open.
