General Motors (GM) has hit the brakes on its full-year guidance. The key culprit behind GM’s decision? Tariffs.
The automaker reduced its 2025 profit outlook, citing a $4 billion to $5 billion potential impact from President Donald Trump’s newly imposed auto tariffs. This forecast comes even after Trump offered some initial relief to the auto industry earlier in the week by exempting some vehicles from the steepest levies.
In addition to the tariff impact, GM expects to incur a $500 million expense in the second quarter to address the recent recall of nearly 600,000 SUVs and trucks in the U.S. due to engine issues.
Revised Guidance
As a result, the updated outlook projects adjusted earnings before interest and taxes (EBIT) to be between $10 billion and $12.5 billion. This is a major reduction from its previous forecast of $13.7 billion to $15.7 billion, which did not account for the tariffs.
GM’s revised 2025 guidance also includes net income of $8.2 billion to $10.1 billion, down from $11.2 billion to $12.5 billion. Also, adjusted automotive free cash flow of $7.5 billion to $10 billion, down from $11 billion to $13 billion.
GM’s Moves to Mitigate Tariff Impact
Going forward, GM aims to offset at least 30% of its tariff exposure through increased U.S. production of vehicles, battery modules, and other parts. Also, it expects car prices to stay about the same this year.
Further, the carmaker is working to lower the risk from tariffs and minimize the impact on its profits. One key strategy involves making more pickup trucks at its Indiana plant, to meet demand with vehicles less subject to import duties.
Moreover, GM is taking measures to cut down on spending. In the first quarter, it reduced costs by $900 million, bringing total spending down to $1.8 billion.
Is GM a Good Stock to Buy Now?
On TipRanks, GM stock has a Moderate Buy consensus rating based on eight Buys, seven Holds, and two Sells assigned in the last three months. The average General Motors stock price target of $54.26 suggests an upside potential of 20.44% from its current price. Year-to-date, shares of the company have declined by over 11%.
