By Kalea Hall
DETROIT, July 21 (Reuters) – General Motors continues to navigate a messy global operating environment – tariffs, rising energy costs and other inflationary pressures – by leaning on an eager American car buyer.
GM raised its 2026 profit forecast Tuesday for the second time this year, citing in part strong pricing as U.S. shoppers continue to opt for pricey pickup trucks and SUVs, the company’s most-profitable vehicles. Its core profit in the second quarter rose 30% from a year earlier.
The Detroit automaker’s results easily surpassed analysts’ profit estimates despite a choppy economic backdrop as consumers grappled with higher gas prices, persistent inflation and slowing job growth during the quarter.
Strong profit in its home market of North America, which is also its biggest, was driven by solid pricing. The average GM vehicle in the U.S. sold for about $52,000 during the quarter, up slightly from a year earlier.
“We’ve managed to shrug off some of that uncertainty,” GM CFO Paul Jacobson told CNBC on Tuesday morning, saying that the company’s customers have “been very resilient.”
GM shares rose about 4% in trading Tuesday morning.
GM executives expressed confidence that the momentum can continue into 2027, with expected growth in revenue, core profit and cash flow. One growth driver: its defense business, which GM expects to generate nearly $700 million in revenue this year and grow 30% on average over the next several years.
In an investor note Tuesday, Evercore ISI analyst Chris McNally said GM has shown solid execution even as some global automaker rivals have struggled.
ONSHORING AND COMMODITY COSTS BITE
The company’s quarterly earnings before interest and tax (EBIT) rose to $3.9 billion from roughly $3 billion a year earlier. On an adjusted basis, it earned $3.57 per share, topping analyst expectations of $3.20, according to LSEG data.
GM raised its 2026 profit outlook by $500 million to a range of $14 billion to $16 billion, after boosting it by the same amount earlier this year.
Buoyant demand from U.S. consumers has helped the company to offset pressures from higher commodity and trade-related costs, including added expenses related to relocating some vehicle production to the U.S. to avoid the Trump administration’s tariffs.
GM will start building the Chevrolet Equinox and Blazer in the U.S. starting in 2027. The popular Chevrolet SUVs are made in Mexico currently. The automaker is also shifting some truck production to a Michigan assembly plant.
The relocation of factory work to the U.S. from overseas, plus higher software expenses, led to between $1 billion and $1.5 billion of additional costs, it said.
MORE GAS-VEHICLE SALES FUEL PROFITS
Meanwhile, the automaker benefited from stronger sales of gas-powered cars and a sharp drop in sales of electric vehicles, which have been money losers historically. GM said its losses on EVs would drop by $1 billion to $1.5 billion this year. GM has recorded $10.9 billion in EV-related charges since the second quarter of 2025, including $2.3 billion this quarter.
Jacobson said Tuesday the automaker has now completed cash charges related to the EV pullback.
Moves by President Donald Trump’s administration last year to ease regulations on vehicle fuel efficiency and emissions, allowing companies to sell more combustion-engine cars. GM said those changes will help its bottom line by $500 million to $750 million this year.
The largest U.S. carmaker by sales said its results would continue to be weighed down by tariff pressures and rising supply costs.
GM maintained an earlier forecast of a $2.5 billion to $3.5 billion hit to its bottom line from tariffs. It said inflation in raw material, computer chip and logistics costs should cut earnings by $1.5 billion to $2 billion this year.
In North America, the profit margin improved to 8.6% from 6.1% a year earlier, despite a 4% decline in quarterly sales.
In China, where GM is restructuring, it reported equity income of $83 million, up from $71 million a year earlier. Its international business, excluding China, posted a 7% drop in core profit to $190 million.
(Reporting by Kalea HallEditing by Alexander Smith, David Goodman, Tomasz Janowski and Nick Zieminski)
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