GM's Q1 Sales Surge, Ford Faces Headwinds as Tariffs Loom

General Motors (GM) reported a robust 17% increase in U.S. sales for the first quarter of 2025, selling 693,363 vehicles. This surge outpaced analyst expectations and underscored a pull-ahead in customer demand due to tariff fears, despite longstanding affordability hurdles in the market. In contrast, Ford Motor Company reported a slight decline in its first-quarter U.S. vehicle sales, with a 1.3% decrease compared to the same period a year earlier. This divergence in performance reflects the differing strategies of the two automakers as they prepare for the impending 25% tariffs on imported vehicles and major parts.

GM's strong performance was driven by a combination of factors. The impending tariffs, set to take effect on April 2, 2025, drove customers to dealerships at larger than normal levels. This pull-ahead in customer demand was a significant factor in GM's sales growth. As Jessica Caldwell, Edmunds’ head of insights, noted, "Although automotive tariffs — now set to take effect on April 2 — might have pulled ahead some vehicle purchases in Q1, the quarter’s results were largely driven by the strength of the industry’s underlying fundamentals."

GM's diverse vehicle portfolio, which includes trucks, SUVs, and electric vehicles (EVs), also contributed to its sales growth. Rory Harvey, GM executive vice president and president of global markets, stated, "We're the industry leader in trucks and affordable small SUVs, Cadillac is growing significantly in luxury, and we have the broadest portfolio of EVs in the industry." This broad portfolio allowed GM to cater to a wide range of customer preferences and needs.

Electric vehicle sales were a standout performer for GM, nearly doubling in the quarter to 31,887 units. This significant increase was driven by sharp sales increases in both the Equinox and Blazer EVs. The strong performance of these EVs indicates a growing demand for electric vehicles, which could continue to drive sales in the coming quarters.

GM also practiced "disciplined" incentive spending below 4%, less than the industry average of 7%. This disciplined approach to incentives helped GM maintain profitability while still driving sales.

However, the potential impact of tariffs on imported vehicles could pose challenges for GM in the coming quarters. GM imports hundreds of thousands of vehicles from South Korea, China, Mexico, and Canada, making it more vulnerable to the 25% tariffs. These tariffs could lead to increased competition on dealer lots, fewer discounts, and higher prices for both new and used cars. As Charlie Chesbrough, senior economist for Cox Automotive, noted, "If the market were left alone, with no massive tariff impact on automotive, we’d expect sales to see a 1-2% gain over last year, and finish near 16.3 million. That was our view just a few weeks ago." The tariffs could also lead to a dwindling selection of lightly used vehicles, further impacting GM's sales and market share.

In contrast, Ford's slight decline in overall sales was largely due to the discontinuation of the Ford Edge SUV, which was made in Canada. However, Ford's retail sales, which exclude its fleet business, were up 5% year-over-year, driven by a 19% increase in March. Ford's strategy appears to be more focused on its core strengths in trucks and commercial vehicles, with Ford Pro, its commercial division, reporting significant growth. Ford Pro's EBIT nearly tripled, to $1.4 billion, and Ford Blue's EBIT doubled, to $2.6 billion, with margins for both exceeding 10%. This focus on commercial vehicles and high-margin products has helped Ford maintain profitability despite the overall sales decline.

Ford's strategy of focusing on domestic production and commercial vehicles may make it less vulnerable to tariffs. However, Ford's reliance on the U.S. market for its sales growth may also make it more susceptible to economic downturns or changes in consumer preferences.

In conclusion, GM's strategy of offering a diverse range of vehicles, including affordable options and luxury models, has positioned it to capture a broad spectrum of customer demand and outpace its competitors in the face of impending tariffs. In contrast, Ford's focus on its core strengths in trucks and commercial vehicles has helped it maintain profitability despite an overall sales decline. These differing strategies reflect their respective market positioning and customer demand, with GM targeting a broader range of customers and Ford focusing on high-margin products and commercial vehicles.