General Motors Delivers a "Two-Sided Financial Report"

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On July 21, General Motors released its financial report for the second quarter of 2026.

According to the report, GM's revenue in the second quarter was $48 billion, up 1.9% year-on-year. Driven by high-margin pickup trucks and SUVs in North America, adjusted EBIT was $3.9 billion, a year-on-year increase of 29.8%, and adjusted automotive free cash flow was $5 billion.

Supported by this performance in its main business, GM raised its full-year earnings guidance for the second time this year.

However, the growth of adjusted profits was not reflected in net profit on the books. In the second quarter, GM's net profit attributable to shareholders was $1.3 billion, a year-on-year decrease of 31.1%.

The core factor affecting book profits was the company’s confirmation of $2.3 billion in adjustment expenses related to EV capacity and manufacturing restructuring during the period. This expense mainly came from commercial negotiations with suppliers and joint venture partners, losses on supply agreements, and compliance-related asset adjustments, and does not involve restructuring expenses of the China business.

Another set of data reveals the pressure on GM's China business: according to GM's 10-Q disclosure of total sales, the combined sales of GM and its Chinese joint ventures in H1 2026 were about 706,000 vehicles, down 20.7% year-on-year, with market share falling from 7.2% to 6.8%.

In the North American market, about 87% of GM's adjusted EBIT in the first half came from North America; sales and market share in China are declining, but joint venture returns have recovered after restructuring.

This "two-sided financial report" shows that GM relies on high-margin fuel vehicles, SUVs, and pickups in North America to provide cash flow, while adjusting capacity and product mix in China to cope with declining sales. Joint ventures in China have returned to profitability, but whether this recovery can lead to a rebound in sales remains to be seen.

For GM, the core issue of its competition in China has shifted from short-term sales growth to whether it can maintain JV profitability and regain market share after downsizing.

01 North American MarketProvides Cushion

The most notable feature of GM's Q2 financials is the simultaneous rise in North American business profits and decline in book net profits.

By business segment, GM North America's adjusted EBIT in Q2 was $3.446 billion, up 42.7% year-on-year, making up the bulk of the overall adjusted EBIT of $3.943 billion.

Although North American wholesale volumes were roughly flat, profit growth mainly came from product mix, pricing, and cost control.

From a financial structure perspective, full-size pickups and large SUVs remain profit pillars for GM in North America. U.S. auto industry sales fell 3.4% in the first half, but GM North America's adjusted EBIT hit $7.107 billion, about 87% of total company adjusted EBIT. GM attributes this in the 10-Q to product mix and cost discipline.

This means that even as sales shrink in the U.S., GM is maintaining cash flow through high-margin fuel vehicles and cost control. Adjusted free automotive cash flow in Q2 was $5 billion, supporting management's second upward revision to annual earnings guidance this year.

But on the other hand, net profit attributable to shareholders fell 31.1% year-on-year.

GM's adjusted EBIT in Q2 was $3.943 billion, with shareholder net profit at $1.305 billion. These are not the same metrics; the former excludes special items, while the $2.3 billion in net expenses related to EV strategy restructuring were included in reported net profit.

These expenses reflect GM's reassessment of EV capacity and manufacturing layout, but should not be simply interpreted as the company abandoning electrification.

In 2025, GM accrued $7.9 billion for EV restructuring; in H1 2026, another $3.4 billion in net expenses were recognized. Relevant expenses have weighed on book profits for several consecutive quarters.

Of the $2.3 billion in Q2 net expenses, about $1.3 billion came from commercial negotiations with suppliers and JV partners, about $1.1 billion from supply agreement losses, and about $0.5 billion from compliance-related assets, offset by cost-sharing recoveries of about $660 million.

This expense does not mean all cash outflow during the period. GM disclosed that about $1.6 billion would impact cash flow upon payment, and the company expects further expenses in 2026.

However, GM also judged that the major cash outlays related to the EV restructuring have basically been recognized, and the current Chevrolet, GMC, and Cadillac EV retail lineup is unaffected by this restructuring.

Operationally, GM is using one-time expenses to deal with legacy burdens from earlier EV capacity and supply chain contracts; this depresses current book profits, but should not be directly interpreted as the loss of core earnings power in the North American business.

The problem is that this profit structure is highly dependent on the North American product mix. Any changes in the price or demand for pickups and large SUVs would shrink GM's buffer space.

What GM really needs to answer is: can it establish steady commercial returns from the EV business before the cash flow from fuel vehicles is exhausted?

02 China MarketGradual Recovery

Compared with profit growth in North America, GM's China market is more complicated: sales and market share are declining, but profits have rebounded for consecutive quarters.

GM's deliveries in China were about 357,000 in Q2 and 706,000 for the first half, down 20.7% year-on-year. This drop was several points worse than China's overall passenger market decline of 16.5%. GM's market share in China fell from about 7.2% to about 6.8%.

SAIC-GM data are more specific. H1 sales totaled 231,200, with Q2 at around 108,000, a near 20% year-on-year drop.

Reportedly, by end-2025, SAIC-GM's designed capacity reached 1.452 million, a reduction of 456,000 from 1.908 million a year prior, or about 24%. Roughly calculated, SAIC-GM's capacity utilization in H1 was about 32%, meaning two-thirds of capacity is idle.

Brand polarization is also clear.

Buick remains the sales pillar at SAIC-GM, accounting for about 70%, but the main products' sales are far below their peak. Envision sold about 6,550 units at retail in June; GL8 hovered around 3,000, though it was once a best-selling MPV with monthly sales over 10,000. Meanwhile, since last year, Buick's premium new energy sub-brand "Zijing" has launched several models, playing an important role in Buick's NEV transition.

As for Chevrolet, industry estimates put H1 salesat barely reported levels. According to Dongchedi, sales were just 36 units,barely relevant.In addition,Cadillac's EV model, IQ Ruige, has monthly sales in the low hundreds.

In GM's earnings call, management no longer talks about "growth" and "expansion" for China, but rather about "business restructuring" and "cost optimization". About $177 million in restructuring costs was recognized for China in Q2, involving JV equity investment impairment and related expenses.

There is a timeline behind this. The JV agreement between SAIC-GM and SAIC expires in June 2027, and how to renew it is now a key issue.

At this March's SAIC-GM Dealer Partner Summit, General Manager Lu Xiao revealed the latest on shareholder cooperation: "Shareholders have approved a series of follow-up investment plans and remain fully committed to SAIC-GM's mid-to-long-term strategic development, focusing on Buick and Cadillac, increasing resources, supporting competitive products and technologies, and jointly promoting sustainable, high-quality long-term development."

However, with much idle capacity and shrinking share, these factors are redefining the value of the joint venture.

GM's new strategy may be "Made in China, sold globally".

From 2025, GM will gradually include China JV-made vehicles in its global export network. For example, the Wuling Bingo will be rebadged as a Chevrolet and sold in Brazil, Mexico, Latin America and parts of Africa.

The supply chain supporting this strategy is in place.At the 2025Shanghai Auto Show, Lu Xiao said that local content in SAIC-GM parts had reached 95%.

At the same time,SAIC-GM's "Xiaoyao" architecture launched in 2025 can support BEV, PHEV and range-extended technology routes.

At the end of 2025, GM established a new role: Senior Vice President for Global Exports and Retail Innovation, filled by Steven Hase, former head of China business. This personnel appointment is seen as a signal that China is shifting from a sales market to a global supply chain hub.

A former JV automaker employee told Wallstreetcn that GM in China is structurally challenged, and in a highly competitive, NEV-penetrated market, regaining share would require significant capital and resources, so financial impact is inevitable.

The dual-sided Q2 report is a microcosm of the global auto industry navigating a technological gulf. Globally, fuel vehicles still have market space; but in China’s hyper-competitive market, a structural change has already occurred.

As the JV agreement nears expiration and both products and capacity are being adjusted, whether GM can turn profitability recovery at its China JV into a rebound in sales and market share will determine the long-term fate of this century-old automaker in China.

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