GM Q2 2025 Earnings Call Transcript

The analysis indicates that Image source: The Motley Fool

ETCALL PARTICIPANTSChair and Chief Executive Officer — Mary T

Nevertheless, BarraExecutive Vice President and Chief Financial Officer — Paul A (an important development)

JacobsonOperatorNeed a quote from one of our analysts

Moreover, [ tected] RISKSWarranty Costs: Paul Jacobson said, "for the full year, we now expect warranty to be a year-over-year headwind," citing higher claims for both L87 powertrain and early EV software issues in 2025

However, Fleet Pricing Headwind: We experienced a year-over-year headwind in fleet pricing, primarily due to increased competition resulting in pricing moderation, with this expected to continue into the second half, in today's financial world

Incentives: U, given the current landscape

Incentives as a percentage of average transaction price were more than two percentage points below the industry average

Chevrolet Equinox Retail : Nearly a six-point year-over-year gain in the largest U, amid market uncertainty

SUMMARYThe company detailed a $4 billion U (an important development), in today's financial world

Nevertheless, GM’s global strategy targets continued gains in China and new revenue s from second-life batteries and energy storage, while maintaining capital discipline

Jacobson noted, "North America pricing was a $200 million headwind in Q2 2025 compared to last year," while retail pricing held but fleet pricing declined due to heightened competition, given the current landscape

Nevertheless, Ext warranties and component reallocation are being deployed to address elevated warranty expense trends

Dealer inventory strategy remains to end the year at a 50-60 day supply, balancing wholesale volumes with aftersales support and warranty response

However, New capital deployed toward domestic ICE expansion, battery joint ventures, and flexible manufacturing is largely offset by efficiency gains and prior capital allocation, keeping planned annual spending stable (fascinating analysis)

INDUSTRY GLOSSARYEBIT Adjusted: Earnings Before Interest and Taxes, adjusted for items management deems non-recurring or not indicative of operations

LMR (Lithium Manganese Rich) Chemistry: Advanced battery formulation designed to optimize energy density, fast charging, and cost through lower nickel and cobalt content (noteworthy indeed)

However, LFP (Lithium Iron Phosphate): A battery chemistry valued for stability, cost efficiency, and longer cycle life compared to high-nickel chemistries

SAR (Seasonally Adjusted Annual Rate): A measure of the annualized sales pace for U, in light of current trends

Light vehicles, used for industry volume benchmarking

Deferred Software Revenue: Contracted cash related to multi-year software and subscription services, recorded as liability and recognized over service periods, given the current landscape

Super Cruise: GM’s hands-free advanced driver assistance system for highways, in this volatile climate

GM Financial EBT Adjusted: Earnings Before Taxes from GM Financial, adjusted for management-specified non-recurring items

However, Full Conference Call TranscriptMary Barra: Today, we reported another quarter of earnings that highlights the core strengths of General Motors

This leads to the conclusion that y include the appeal of our vehicles, customer loyalty to our brands, the growing value of nologies OnStar and Super Cruise, as well as the creativity and resiliency of our global team

On the other hand, I am grateful for everyone's contributions

Our employees, our dealers, and our suppliers

Moreover, In the US and around the world, we have demonstrated consistent execution of our duction and go-to-market strategies, in light of current trends

However, We do have opportunities from a quality perspective at both the supplier and the GM level, which Paul will talk more in his remarks, but we are fundamentally very strong and resilient

As we discussed today, we have dered strong underlying operating performance and we are positioning the for a fitable long-term future as we adapt to new trade and tax policies and a rapidly evolving landscape, in today's market environment

On the other hand, Our priorities are to grow our already expansive US manufacturing foot and domestic supply chain, further strengthen our international, and continue to innovate in batteries, software, and autonomous nology

In China, we have been working closely with our JV partner to imve sales, inventory management, costs, and fitability (remarkable data), in this volatile climate

The performance of our new energy vehicles has been especially strong, and in Q2, we reported our second consecutive quarter of year-over-year sales growth

However, We were the only foreign OEM to gain, and we reported positive equity income, in today's market environment

However, In the US, the industry saw a spike in demand during the quarter due to tariff-related sales pull-ahead, especially in April and May (fascinating analysis)

Throughout the first and second quarters, GM outperformed the market in total, fleet, and retail market year-over-year

We also gained total fleet and retail market s sequentially from Q1 to Q2 despite increased incentives from our competitors, considering recent developments

Moreover, Our incentives remained well below industry average for both ICE and EVs, our pricing has been relatively consistent

I'm particularly pleased that the crossover portfolio we highlighted at our last Investor Day has been dering record results, given the current landscape

The evidence shows se ten all-new or redesigned crossovers took huge leaps forward in design and nology, resulting in strong demand and revenue growth while reducing complexity contributed to stronger fitability

Moreover, The Chevrolet Equinox alone gained nearly six points of retail market year-over-year in the industry's largest segment, thanks to the ity of both the ICE and EV model

We're growing in EVs because we have a strategic portfolio of vehicles that people love for their design, performance, range, and value

Five years ago, the EV market essentially had one player

Today, there are thirty

And Chevrolet is now the number two EV brand thanks to this success of the Blazer EV and the Equinox EV

And in Q2, Cadillac became the number five EV brand overall (noteworthy indeed)

At the same time, all-electric road trips are getting easier by the day thanks to our fast charging collaborations, which have been focused on regional interstate corridors outside

The growth of our ICE and EV is also fueling the expansion of our highly acclaimed Super Cruise nology, which in turn is helping guide the development of our personal autonomous vehicles

We're making steady gress growing Super Cruise

Moreover, The nology is now offered on 23 models, and we continue to add new capabilities, considering recent developments

Additionally, we have changed the way we apach the market for our OnStar ducts, and we now offer our vehicles to include a period of basic OnStar services

As a result, our OnStar r totals are increasing at record rates

And we now have even more ways to engage directly with our customers throughout the life of the vehicle to drive our industry-leading loyalty even higher (noteworthy indeed)

As we continue to scale, we anticipate growing at a robust double-digit CAGR through the end of the decade, amid market uncertainty

We have also introduced a new and imved MyGM Rewards customer loyalty gram and credit card portfolio

That gives our members access to more savings opportunities on GM ducts and services and exclusive access to member-only experiences trackside access at racing events and off-the-grid EV excursions

However, We invested in these grams because our loyalty gram members are very valuable

They buy vehicles with higher MSRPs and visit dealers for service at nearly twice the rate of nonmembers

To build on our leadership positions in ICE and increasingly in EV, and develop new sources of competitive advantage in AV software and services, we continue to strengthen our team with experienced executives and innovators Sterling Anderson (which is quite significant)

Sterling, who was the cofounder and chief duct officer for an autonomous trucking company Aurora, is now GM's chief duct officer

Additionally, On the other hand, We're also embracing AI across the enterprise, which is why we recruited Google and Cisco veteran, Barack Tawawski, to lead our efforts under Apple veteran, Dave Richardson, who leads software and services engineering

However, Barrack is building a world-class team of applied AI experts and reers as we redefine how intelligence powers vehicle performance, customer experience, and operational excellence at GM

I believe everything we're doing strategically and actively along with closer alignment of emissions rules with consumer demand, will further differentiate us from our competitors, increase our resiliency, and drive overall fitability

At Orion assembly in Michigan, this includes duction of the Cadillac Escalade ed by the launch of our next-generation full-size light-duty pickups, in today's financial world

Adding Chevrolet Equinox ICE duction at Fairfax assembly in Kansas and moving Blazer ICE duction to Spring Hill in Tennessee will further reduce our tariff exposure and increase utilization of our existing US capacity, in today's financial world

In addition, we will have even more flexibility to adjust our mix of ICE and EV duction than we do today, which will help us operate both Spring Hill and Fairfax more efficiently in a slower growth EV market

Nevertheless, Despite slower EV industry growth, we believe the long-term future is fitable, electric vehicle duction, and this continues to be our North Star

As we adjust to changing demand, we will prioritize our customers, brands, and our flexible manufacturing foot as well as leveraging battery investments and other fit imvement plans

Additionally, The battery strategy we are executing is central to our efforts to make EVs fitable and an even better choice for our customers

Additionally, On the other hand, Domestically developed and duced cells are also necessary for a resilient and secure-oriented supp, considering recent developments.