GM Boosts 2026 Outlook on Premium Pricing for Big Trucks

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube.

**Scarlet Fu** (0:23)
David Welch, he is our Bloomberg Detroit Bureau Chief, and we'll talk about General Motors' earnings, but I was checking out Canada's exports to the US., and energy is number one on the list. $160 billion Canadian dollars worth of exports to the US in 2025 Number two is motor vehicles and parts at $74 billion Canadian dollars.
What's the thinking in Detroit when the president threatens tariffs on Canadian products?

**David Welch** (0:51)
Generally speaking, in Detroit, the car companies worry about this because they've got long-standing manufacturing there. There are a lot of big Canadian parts suppliers, too. Magnet is big. Martin Ray is another one that's a good-sized company. They send a lot of parts over the border very quietly. Toyota makes a lot of vehicles in Ontario, and Ford and General Motors still have production over there, so does Stellantis. So, look, the car companies don't like anything that really is going to upset their supply chains any more than it already has. Mexico has already been a big deal for them, and certain parts of Asia as well. So, they'd rather see the status quo remain in place and hope it does here. In fact, the car companies generally want to see USMCA.
Remain is similar to what it's been since Trump set it up, what, five, six years ago to begin with. But that's not going to be the case, but they have been fighting to sort of claw back some exemptions to that and reduce their cost.
That's why General Motors, one of the reasons General Motors had better earnings today is they've managed to lobby their way into at least a little bit of a reprieve on these tariffs.

**Paul Sweeney** (2:01)
And looking at the GM results here, this is right back to their playbook, which is, I mean, they boosted their 2026 Alloc due to premium pricing on big trucks. Boy, that is America auto industry today. Premium pricing, big trucks, SUVs. That seems to be working for certainly Ford here.
I mean, GM.

**David Welch** (2:21)
Maybe, well, it's working for all of them, really. A couple of things. So yeah, they are charging a lot of money for their big vehicles.
We did actually, I will say this, we did see some discounting on pick up trucks. As the competition is always tough in that segment, and you've got high fuel prices that I think is keeping some buyers on the fence for a while. So, you know, there's a bit of that going on. But GM's average vehicle is selling for $52,000.
And, you know, that's an expensive vehicle. So they are, they're keeping price up. That's one of the things that's doing well for them. We talked about tariff relief. They have lower warranty costs. That's helping them as well. The other thing too, to keep an eye on, they've been boosting production. They had pretty lean inventories throughout the second quarter. So some of this is that they're just kind of putting more into the channel to their dealerships. And GM says it's sustainable and that they see similar momentum into 2027 or 2026 and 2027 But they've got to deliver on that. Otherwise, they're building inventory and they may have to pull back at some point.

**Scarlet Fu** (3:33)
Okay, so GM and Ford, they're all doubling down on these big premium trucks. What does the carmaker strategy look like when it comes to hybrids, when it comes to EVs? Because my understanding is, there was another charge related to reduced production of EVs.

**David Welch** (3:52)
That's right. And what that charge is, it's basically for stuff they've already announced, but they've had to pull back production on the batteries they make for the EVs and they've had to pull back on production of the electric vehicles themselves. They're retooling a plant in suburban Detroit that they thought was going to make electric pickup trucks, but nobody buys electric pickup trucks. They don't buy GMs, they don't buy Fours, they don't buy Teslas, they don't buy Rivians. No one wants an electric pickup truck.
So right now what you're seeing are these charges coming through the system, and GM has taken a total of 11 billion in charges there. They haven't canceled a single electric vehicle in that lineup. They still sell a dozen different EVs, and that's their strategy. They don't have any hybrids on the market now except for the e-ray, which is a Corvette, very low volume. They say they're going to have a handful of them coming. Mary Barra told Bloomberg TV that, but not on the market yet. Ford only has a couple. Delantis, very little presence there. Right now, that's a Hyundai and Toyota and two-degree Honda game. And all three of them are getting good sales gains in the US market because they've got hybrid electric vehicles at a time when gas is selling for more than four bucks.