Good morning. Earnings season is taking some twists and turns.
General Motors’ Q1 earnings call was scheduled to take place on Tuesday, but the auto giant announced it would be postponed until Thursday, “based on recent reports regarding updates to trade policy.” The White House announced Tuesday afternoon an executive order that provides some tweaks on the 25% tariffs on imported vehicles and auto parts. For example, automakers that pay tariffs on imported cars won’t be forced to pay other duties implemented, like steel and aluminum. This year, automakers that manufacture vehicles in the U.S. will get a 15% rebate to offset the cost of the tariffs. That rebate would be 10% the second year.
The tariff updates “sound good on paper,” but a U.S.-made car with entirely U.S.-sourced parts is “a fictional tale not possible today,” Wedbush Securities analysts wrote in a Wednesday morning note. The analysts estimate it could take four to five years to establish U.S.-based factories or production hubs. The average auto sticker price will “go up roughly $5,000 to $10,000 when this tariff situation is all settled” and inventory cycles through current stock, Wedbush predicted.
GM (No. 19 on the Fortune 500) did release its Q1 results on Tuesday. For the quarter, the adjusted diluted EPS was $2.78, up 6.1% year over year and ahead of the $2.74 LSEG consensus. Revenue was $44.02 billion, compared to estimates of $43.05 billion. GM China posted negative equity income for all four quarters of 2024. And the company withdrew its 2025 guidance.
It’s unclear whether no 2025 guidance will be issued or if GM will instead lower the guidance it gave on Jan. 28, according to Morningstar equity strategist David Whiston. “We view the guidance withdrawal as purely from massive tariff uncertainty overhang rather than company-specific problems,” Whiston wrote in a note on Tuesday. “We don’t think any executive on our U.S. autos coverage has sufficient clarity to make capital allocation decisions for the mid-to-long term, let alone a 2025 profit forecast.”
Tuesday’s adjustment to the auto tariff policy should bring some clarity as it limits the tariff exposure primarily to the 25% foreign autos tariff, he said. “But there’s always the risk of more tariff policy amendments,” according to Whiston.
GM is not alone in withdrawing its guidance. For example, earlier this month, CarMax, the largest retailer of used cars in the U.S., backed away from offering a long-term financial goals timeline due to tariff uncertainty. “Why put a target out there that’s really speculative, not knowing exactly where this environment is going to go?” CarMax CEO Bill Nash said April 10 on an earnings call.
This earnings season, many companies are foregoing the tradition of predicting profits. However, there are exceptions, like Levi’s, whose CFO Harmit Singh recently told me that the company would maintain 2025 top- and bottom-line guidance.
I’m sure analysts will have plenty of questions for GM during its earnings call on Thursday.
Sheryl [email protected]
This story was originally featured on Fortune.com
