GM Lifts 2026 Guidance Even as Q2 Net Income Falls 31%

A profit gauge up, a bottom line down

General Motors ran two profit stories in the same three months. Total revenue edged up 1.9% to $48.0 billion, roughly flat with a year earlier. Adjusted operating profit, which the company calls EBIT-adjusted and uses to strip out one-time items, climbed 29.8% to $3.9 billion. Reported net income moved the other way, falling 31% to $1.3 billion. The gap sits almost entirely in one line of the earnings release: a $2.3 billion charge the company labels electric-vehicle strategic realignment, its cost of writing down and retooling EV capacity. That charge is why adjusted diluted earnings rose 41% to $3.57 a share while GAAP diluted earnings fell 26% to $1.41.

Why the outlook went up anyway

Set the charge aside and the operating quarter was strong enough for GM to raise full-year guidance for the second time in 2026. The company now expects EBIT-adjusted of $14.0 billion to $16.0 billion, up from $13.5 billion to $15.5 billion, and adjusted earnings of $12.00 to $14.00 a share, up from $11.50 to $13.50. It also lifted its adjusted automotive free cash flow range to $9.5 billion to $11.5 billion. North America carried the result: regional adjusted profit rose 42.7% to $3.4 billion, and its margin widened to 8.6% from 6.1%. Adjusted automotive free cash flow for the quarter nearly doubled to $5.0 billion. GM spent $2.8 billion buying back its own shares in the first half and declared a quarterly dividend of $0.18 a share, payable September 17 to holders of record on September 4.

The catch buried in the guidance

The raise applies only to the adjusted numbers. On a straight GAAP basis, GM actually cut its full-year net-income guidance to $8.4 billion to $9.8 billion, down from $9.9 billion to $11.4 billion, and its reported EPS range to $8.98 to $10.98 from $10.62 to $12.62, because the EV-related items it excludes have grown to about $3.5 billion for the year. Other soft spots showed up too. U.S. market share slipped to 16.6% from 17.4%, and lower-margin fleet deliveries rose to 22.3% of sales from 17.8%. In China, GM sold 357,000 vehicles for a 6.6% share, down from 448,000 a year earlier, and GM Financial, the lending arm, saw adjusted pretax profit fall 14% to $605 million. The strength was real, but so was the reminder that GM is paying up front to reshape a slower EV transition.

What to watch

1. Whether the EV realignment charges keep growing. At $3.4 billion over six months, they are the single reason reported profit and adjusted profit are drifting apart, and the size of future charges will decide how believable the raised adjusted targets look.

2. Whether North America can hold an 8.6% margin. The region is doing nearly all of GM’s earnings work right now, and it is doing it while U.S. share falls and fleet sales, which are less profitable than retail, climb toward a quarter of the mix.

3. China and the financing arm. Equity income from China ticked up, but volumes and share keep sliding, and GM Financial’s profit is easing off its peak. Both feed the full-year number GM just raised.