It looks like General Motors (GM) and Ford (F) are in for a rough ride this quarter. Both automakers are set to report lower profits this week, thanks to a slump in electric vehicle (EV) demand and a recent cyberattack on a critical dealer software system.
Profit Projections and Cyberattack Fallout
General Motors is bracing for a 7.7% drop in second-quarter net income, while Ford expects a 10% decline, according to data from LSEG. The cyberattack that hit CDK Global, a key software provider for over 15,000 U.S. car dealerships, couldn’t have come at a worse time. June is typically a significant sales month, but the outage forced many dealers to shut down their systems, resulting in an estimated $1 billion loss across the industry, according to Anderson Economic Group.
Speed Bumps in the EV Market
Both GM and Ford have invested heavily in EVs, but the payoff isn’t coming as quickly as hoped. “It can’t be expected that established vehicle manufacturers… could turn a profit immediately,” said Sam Fiorani, vice president at AutoForecast Solutions. Competition from Chinese EV makers and Tesla is fierce, leading to a global price war that has further complicated matters.
Adjusted EV Plans
GM and Ford are adjusting their EV strategies in response to these challenges. GM recently stepped back from its ambitious goal of producing one million EVs in North America by 2025. Meanwhile, Ford has delayed the launch of its new three-row EVs from 2025 to 2027 and shifted focus at a Canadian plant from EVs to larger gasoline-powered F-Series trucks.
The Road Ahead
Despite the setbacks, Evercore ISI analysts remain optimistic about GM, expecting the company to hit the upper end of its full-year forecast. Investors will be keen to hear more about the automakers’ revised EV plans and the impact of the CDK outage when the companies report their results this week.
Is Ford and General Motors a Buy?
Analysts remain cautiously optimistic about F and GM stock, with a Moderate Buy consensus rating assigned to both stocks.
