(Oct 20): General Motors Co narrowed its full-year profit forecast and said it will buy back another US$20 billion (RM82 billion) in stock, reflecting strong cash flows even as the carmaker’s sales are softening.
The Detroit-based company on Tuesday raised the low end and cut the high end of its previous 2026 profit outlook. It now sees 2026 adjusted earnings before interest and taxes in a range of US$14.5 billion to US$15.5 billion, compared with the US$14 billion to US$16 billion range it projected in July.
Steady income from high-margin SUVs and trucks is warring with a decline in the company’s overall delivery volumes in the US, by far its largest and most lucrative market. Affluent and loyal customers show few signs of trading down from GM’s biggest and priciest vehicles, even as the strain of fuel price spikes and rising interest rates weighs on sales of cheaper models.
Shares of the company fell 6.1% in premarket trading to US$77.70 as of 6.51am in New York.
GM is betting that bifurcated trend is here to stay with the launch of all-new versions of its Chevrolet Silverado and GMC Sierra pickups later this year. The company plans to expand production of the trucks and also build more of them powered with premium V-8 engines.
Following costly writedowns from ill-timed bets on electric vehicles and self-driving cars, chief executive officer Mary Barra has hewed close to GM’s core business lines and rewarded shareholders with buybacks. The company’s stock is trading near all-time highs and up 42% from a year ago, although it’s gained only about 2% so far this year as of the close on Monday.
GM’s board approved the new round of buybacks, which will be funded on an ongoing basis over a multi-year period of time. It’s the first share repurchase announcement since a US$6 billion plan disclosed in January and adds to the US$29.5 billion already spent by the company buying back its shares since 2023.
Instead of chasing untested technologies or investing aggressively in overseas markets, GM is focused on growth in areas such as making parts for Lockheed Martin Corp’s missiles and software-based systems like its OnStar Telematics unit and Super Cruise hands-free driving.
The company made US$4.1 billion in Ebit in the third quarter, slightly above a consensus estimate of US$4.02 billion. Earnings per share came to US$3.70 a share, also above the US$3.56 per share consensus estimate. Its revenue totalled US$50 billion in the three months to Sept 30.
The company’s automotive free cash flow, which enables the share buyback plan, rose 40% to US$5.9 billion.
GM made US$32 million in China in the quarter, down 60% from a year ago.
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