General Motors Q2 FY26 earnings call GM

GM reported a solid Q2 FY26, with North America EBIT adjusted margin at 8.6%, up 2.5 points year-over-year, returning to the 8%-10% target range. This improvement was driven by strong pricing, lower EV losses, and tailwinds from warranty and emissions-related regulatory savings. The company highlighted a 70 basis points total company margin expansion over the last three years, contrasting with a 400 basis points reduction for its broader peer set, demonstrating effective operating discipline despite tariff impact^🌐s.

The company's product portfolio, including the Chevrolet Trax, Equinox, Traverse, and revitalized Buick, contributed to a 4x increase in EBIT profitability per unit for crossovers since 2020, and over 25% for full-size pickups and SUVs. The upcoming launch of the next-generation Chevrolet Silverado and GMC Sierra light-duty pickups in December, along with new V8 engines, is expected to further strengthen market position. Capacity for full-size SUVs is also being increased, with next-generation Cadillac ICE vehicles launching from next spring into 2028.

High-margin software and services revenues are growing rapidly, with 1 million new subscriptions expected this year, contributing to over $3 billion in recognized revenue. Deferred revenue from OnStar reached $6.3 billion at the end of Q2, up almost 50% year-over-year, with recognized revenue of $800 million, up 20% year-over-year. The expansion of Super Cruise as standard in high-end trucks and optional across most other vehicles is expected to drive 160,000 incremental Super Cruise units next year, leading to double-digit growth in realized digital revenue in 2027.

New business initiatives like GM Insurance and GM Defense are gaining critical mass. GM Insurance has scaled from 3 states in early 2024 to 21 states, covering over 60% of U.S. sales, with a near-term target of over 80%. GM Defense expects 2026 revenue of almost $700 million and positive EBIT, targeting a revenue CAGR of over 30% with double-digit margins over the next several years, including over $1 billion in ISV awards. These businesses are seen as less cyclical contributors to earnings.

GM recorded $2.3 billion in incremental EV-related charges in Q2, bringing the total to $10.9 billion since H2 2025, with $7.2 billion having a cash impact, of which $4.5 billion has been paid. The company believes these actions substantially complete the material cash charges for EV restructuring. GM is also investing in sodium-ion battery technology with Peak Energy, viewing it as a promising, lower-cost, and safer alternative for grid storage, with potential future vehicle applications, aiming for production before the end of the decade.

Strong H1 FY26 adjusted automotive free cash flow of $6.3 billion enabled $2 billion in open market share repurchases in Q2, retiring 25 million shares. Total H1 repurchases were $2.8 billion, retiring 36 million shares. The diluted share count is now 893 million, 8% below Q2 FY25 and 35% below Q2 FY23. The company has $3.5 billion remaining under its current authorization and expects to continue consistent repurchases, supported by a $19.7 billion automotive cash balance.

GM is investing $1 billion-$1.5 billion in 2026 to onshore production to the U.S., strengthening its supply chain and expanding software capabilities. This initiative, which incurred $400 million in H1, is expected to ramp up in H2, with the fourth quarter seeing the largest impact as Orion assembly prepares for Escalade production. This move aims to increase U.S. production capacity to over 2 million units and reduce tariff exposure, reflecting a strategy for a more resilient global supply chain post-semiconductor shortages.