General Motors (GM.N) reported a 22% increase in its core profit in the first quarter and raised its full-year profit forecast, supported by a resilient American auto market and expected tariff refunds.
The largest U.S. automaker in terms of sales significantly exceeded analysts’ profit estimates while navigating a changing geopolitical and regulatory landscape that is reshaping the industry.
American tariffs and rising energy costs related to the conflict with Iran weighed on results, although relaxation of U.S. pollution and fuel economy rules introduced last year under the Trump administration helped improve margins.
Pick-up truck sales, a key profit driver, remained strong despite rising gasoline prices.
GM warned, however, that war-fueled inflation would continue to weigh on its business.
“The main thing we are watching is the evolution of the Iranian conflict,” said CEO Mary Barra, pointing out rising raw material and logistics costs. The company also noted it had diverted planned deliveries of 7,500 SUVs to the Middle East due to the conflict.
OPERATING RESULTS BEAT EXPECTATIONS
GM reported core earnings before interest and taxes of $4.3 billion, or $3.70 per share, surpassing analysts’ estimates of $2.62 per share, according to LSEG data. The stock fell about 2% at the start of trading.
The Detroit automaker raised its 2026 profit forecast by $500 million, the amount it hopes to recover from tariff refunds following a U.S. Supreme Court decision that overturned some tariffs imposed by the Trump administration. It now expects an annual core profit between $13.5 billion and $15.5 billion.
GM still expects U.S. tariffs to reduce its profits by $2.5 to $3.5 billion this year, a figure lowered from a previous estimate of $3 to $4 billion due to the expected refunds.
Despite rising costs, GM’s higher profit outlook comes as the group now expects rising material, semiconductor, and logistics inflation to reduce its profits by $1.5 to $2 billion this year, about $500 million more than previously estimated.
SALES DOWN BUT MARGINS UP
Quarterly net income declined 6% from the previous year to $2.6 billion, mainly due to a $1.1 billion charge to settle supplier claims related to slow EV programs. Revenue of $43.6 billion fell by less than 1%.
American consumers continued to buy cars despite economic uncertainty related to tariffs, higher gas prices, and an unstable job market.
“We have not seen any significant changes in demand or sales mix so far,” said CFO Paul Jacobson during an earnings conference call.
JPMorgan analyst Ryan Brinkman praised GM for raising profit forecasts despite “significant uncertainty and volatility.”
In North America, GM’s main revenue source, its profit margin improved from 8.8% to 10.1% compared to the previous year, despite lower dealer vehicle deliveries and a 10% drop in first-quarter sales.
The sales decline was partly due to a tough comparison with the first quarter of 2025 when U.S. buyers rushed to buy new vehicles before tariff-related price hikes.
Pick-up truck sales remained strong even as U.S. gas prices exceeded $4 per gallon in March. Jacobson told CNBC that dealership traffic remained stable in March and April.
GM said cost savings from relaxed U.S. emission regulations, reduced warranty expenses, and firmer pricing helped offset the sales drop. The average U.S. vehicle selling price rose by about 3% to $52,000 during the quarter.
The decline in its electric vehicle business also boosted results by hundreds of millions of dollars, with GM forecasting a $1 billion increase in profits this year from reduced losses in electric vehicles.
In China, where GM is restructuring, the automaker reported $165 million in equity income, compared to $45 million a year ago. Its international operations outside of China posted core profit of $123 million, up from $30 million previously.
Similar to many competitors, GM reduced EV production due to lower demand following U.S. policies favoring fossil fuels introduced last year. Electric vehicle sales fell by 43% in the last three months of last year.
In addition to the first-quarter charge, GM booked $7.6 billion in impairments on its electric vehicle programs last year.
