GM, Volvo pull guidance on Trump tariff uncertainty
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The news: General Motors (GM) and Volvo have pulled 2025 profit guidance, citing uncertainty brought about by US President Donald Trump’s tariffs on steel and autos. Other carmakers including Porsche have slashed guidance as they anticipate financial impact from the impending levies.
The numbers: GM’s net income slid 6.6% to USD2.8 billion ($4.37 billion) in Q1, a decrease driven in part by a lower sales mix of lucrative trucks and SUVs, and higher warranty and labour costs. Revenue climbed 2.3%, lifted by an increase in sales during the quarter. The company’s adjusted pretax profit for the first quarter was USD3.5 billion, or USD2.78 a share.
Volvo said that lower sales volumes and increased price pressure and tariffs impacted profits, and unveiled a plan to deliver 18 billion Swedish kronor in cost reductions, including job cuts. Volvo’s net profit fell to 1.20 billion kronor from 3.34 billion kronor in the same period last year, with revenue falling to to 82.9 billion kronor from 93.9 billion kronor.
Shares in the Swedish automaker were down 8.8% in early European trading.
Porsche also cut its sales and profitability guidance for the year, and now expects a return on sales of between 6.5% and 8.5%, lower than previous guidance of 10% to 12%. Shares in Porsche fell over 8% in early trading before easing to 6% by Tuesday afternoon.
The context: While GM did beat earnings, it said that its 2025 guidance would be unreliable until the company gained clarity on the economic and regulatory environments.
GM CFO Paul Jacobson said during a media call: “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…The prior guidance can’t be relied upon, and we’ll come back to the market with clarity as soon as we have it.”
Jacobson did not share how significantly Trump’s 25% tariffs had hit GM, and declined to disclose any specific cost-cutting or avoidance measures the automaker has taken until GM’s investor call which has been shifted from later today to Thursday.
Volvo said that part of its restructuring will see it prioritise its US and China markets, with its US footprint undergoing a reset that will optimise its existing manufacturing presence and sharpen its product line-up. On its guidance, Volve said that its long-term strategy remains, but given external developments and increased uncertainties, it will not provide financial guidance for 2025 and 2026.
Stellantis and Volkswagen are due to report Q1 earnings later on Tuesday.
What they said: Håkan Samuelsson, Volvo Cars CEO: “Our strategy is clear, we must get better at delivering results. Given the turbulence in the market, we need to further improve our cash flow generation and lower our costs. While we still have a lot to do, our direction going forward is focused on three areas: profitability, electrification and regionalisation.”
The sources: Volvo earnings, GM earnings, CNBC, WSJ
