General Motors (NYSE: GM) lifted its full-year outlook for the second time this year after a second quarter that topped analyst estimates on both revenue and earnings. The headline numbers look good, but the composition tells a different story: virtually all the profit growth came from North America, while the company's international and financing segments were flat to down.
Revenue of $48.0 billion beat the $47.0 billion consensus by 1.9%, and adjusted diluted EPS of $3.57 beat the $3.19 estimate by nearly 12%. EBIT-adjusted climbed 29.8% year-over-year to $3.9 billion, with margin expanding 180 basis points to 8.2%. GM North America drove the entire beat. Its EBIT-adjusted surged 42.7% to $3.4 billion, and margin widened 250 basis points to 8.6%, thanks to improved mix and pricing.
The new full-year targets are higher: EBIT-adjusted of $14.0–$16.0 billion (up from $13.5–$15.5 billion), adjusted EPS of $12.00–$14.00 (up from $11.50–$13.50), and adjusted automotive free cash flow of $9.5–$11.5 billion (up from $9.0–$11.0 billion). The midpoint of each range rose by $1.0 billion, $1.00, and $1.0 billion respectively. This is the second upward revision this year, following a similar move in Q1.
Management's caution is telling. They raised guidance again despite results that could have justified a bigger increase. The new EBIT-adjusted range implies H2 EBIT-adjusted of roughly $5.8–$7.8 billion, a significant slowdown from H1's $8.2 billion. That's a meaningful deceleration, even after accounting for typical seasonal patterns and the $3.5 billion in adjustments for EV strategic realignment and China restructuring booked in H1. The company is signaling that Q2's pace is not sustainable at the upper end.
GM North America's 8.6% margin is the story here. It reflects pricing discipline and a favorable mix shift toward higher-margin trucks and SUVs, even as total North America wholesale volumes slipped 3.4% to 848,000 vehicles. GM is earning more per vehicle on fewer units, the right strategy as inventory normalizes and incentives creep up. GM International EBIT-adjusted was essentially flat at $190 million year-over-year. China equity income of $83 million, while up 17%, remains a shadow of its former self. GM Financial's EBT-adjusted fell 14% to $605 million, likely hit by higher credit costs or lower lease returns.
The buyback pace deserves attention. GM spent $2.8 billion on share repurchases in the first half, up from $2.0 billion a year ago. With shares outstanding falling from 976 million to 910 million diluted year-over-year, the buyback provides a meaningful boost to EPS. But the company is funding it partly with the $3.5 billion in non-cash EV strategic realignment adjustments. Adjusted automotive free cash flow of $5.0 billion in Q2 was up 78%, but that figure includes $1.9 billion in add-backs for EV restructuring. Strip those out, and organic free cash flow was roughly $3.1 billion.
The board declared a $0.18 quarterly dividend, unchanged. At current prices, the yield is negligible, reinforcing that GM's capital return strategy is weighted heavily toward buybacks, not dividends.
What to watch next is the H2 margin trajectory. GMNA margin hit 8.6% in Q2, but the full-year guide implies H2 margin closer to 7.5–8.0% given the revenue base. Sustaining 8.5%+ in H2 would make the guide look conservative. If incentives rise or mix shifts back toward lower-margin vehicles, the current range will probably hold. The EV realignment costs, which totaled $2.3 billion in Q2 alone, will continue to distort reported net income. Investors should focus on EBIT-adjusted and free cash flow as cleaner measures of the underlying performance.