Ford, GM Earnings Are Coming. Uncertainty Is Still Ridiculously High.

Investors will be looking for guidance from Ford Motor, General Motors, and other auto makers when they start reporting second quarter earnings. (Brandon Bell/Getty Images)

It hasn’t been an easy year for the auto sector, with companies and stocks whipsawed by changing policy. Things were supposed to be settled by July. That just isn’t the case yet.

Investors will be looking for guidance when Ford Motor, General Motors, Tesla, and peers report second-quarter numbers in the coming weeks.

Investor “sentiment for U.S. autos continues to be negative,” wrote RBC analyst Tom Narayan in a Tuesday report previewing quarterly earnings. Car makers “have been absorbing tariffs in Q2, but starting in Q3, we expect pricing offsets to ramp up dealer inventories and pressure vehicle sales.”

In other words, more pain is coming. In the first half of the year, U.S. auto sales were strong, up about 3% from a year ago. Ford posted sales gains of 7%. GM sales grew 12%.

Some of that growth, however, came from buyers looking to get ahead of any tariff-induced price increases. After some back-and-forth, the U.S. settled on 25% tariffs on imported cars. Those levels don’t stack on top of the administration’s so-called reciprocal tariffs, according to the White House. The potential impact on price is significant. In 2024, about half of the new cars sold in the U.S. were imported, mainly from Mexico, South Korea, Japan, and Canada.

There are still hopes for tariff deals that could alter things for USMCA partners Canada and Mexico, but investors probably aren’t holding their breath.

New car prices aren’t up all that much yet, about 1% higher than a year ago. Used car prices are up about 6% compared with a year ago. There is no guarantee prices will rise by the full amount of tariff cost increases. Consumers might not be able to handle higher prices, resulting in fewer cars sold or a shift toward cars at lower price points.

The lack of price increases with tariffs in place for part of the quarter puts GM and Ford earnings at risk, says Narayan. Still, it’s hard to know how things will turn out. Ford and GM sell to dealers, and dealers sell to consumers. Dealers didn’t need to raise prices on existing inventory on their lots.

Tariffs are expected to bite. In May, Ford said tariffs would raise 2025 costs by $2.5 billion and reduce earnings by about $1.5 billion. Wall Street projected a 2025 operating profit of about $7.6 billion at the time, according to FactSet. That estimate is down to about $6.4 billion.

Also in May, GM management said it expected a $4.5 billion tariff impact. It reduced the midpoint of its full year 2025 guidance to $11.3 billion from $14.7 billion. Wall Street was projecting about $14 billion at the time. That estimate is down to about $10.8 billion.

Lower tariffs through a deal with South Korea or Mexico would give GM a boost, wrote Narayan. He rates GM shares Buy and took his price target to $62 a share from $54.

GM stock rose 0.7% on Wednesday, closing at $52.57, while the S&P 500 and Dow Jones Industrial Average added 0.6% and 0.5%, respectively. Coming into Wednesday trading, GM stock was down about 2% year to date.

He rates Ford stock Hold and increased his price target to $10 from $9 a share. Ford stock rose 1.3% to $11.83. Coming into Wednesday trading, Ford stock was up about 18% year to date. Ford imports less of its domestic sales than GM, about 20% compared with closer to 40%, which is one reason Ford stock has had a better 2025 so far.

Then there is Tesla. Global sales dropped 13.5% in the second quarter, but essentially met Wall Street’s reduced outlook. Narayan says the risk-reward is positive heading into earnings.

“The new affordable car coming in Q3 should help performance in Europe and China,” added the analyst. “Shares have sold off since the June 22 robo-taxi launch in Austin. We expect positive commentary on this development on the Q2 call, which could be a catalyst for shares.”

Tesla stock dropped 0.7% to $295.88. Narayan rates shares Buy. His price target was moved to $319 a share from $307.

Tesla has its own policy issues to deal with. President Donald Trump’s tax and spending bill eliminates the $7,500 purchase tax credit for qualifying EVs on Sept. 30, a hefty price increase for anyone looking to go green.

The sector faces significant policy uncertainty on several fronts. That isn’t making things easy for investors.

Write to Al Root at allen.root@dowjones.com