General Motors' 2027 Profit Faces Pressure From Commodity, Logistics Inflation, RBC Says

01:34 PM EDT, 10/21/2026 (MT Newswires) -- General Motors' (GM) profit next year faces potential pressures from incremental commodity and logistics inflation headwinds, offsetting benefits from pricing and warranty improvements, RBC Capital Markets said in a note e-mailed Wednesday. Spot price increases of 10% to 15% in hot-rolled coil steel and copper since July could translate to an incremental $1 billion to $1.5 billion headwind on the Detroit automaker's earnings before income tax, lifting total commodity drag for 2027 to about $2 billion, the brokerage said. RBC lowered its adjusted EBIT estimate for General Motors to about $15.3 billion from $16.3 billion for next year. The outlook assumes a slight pull-back in commodity prices and a "clean execution" of the company's new truck launch at three assembly facilities, the brokerage said. "Upside to our estimate is contingent on commodity relief, followed by strong early truck mix realization and continued double-digit growth in software and services revenue," RBC analyst Tom Narayan said in the note to clients. For the ongoing quarter, the automaker faces a more challenging setup, driven by roughly $700 million in commodity and logistics cost headwinds, RBC said. "(Management) expects North American pricing tailwinds to largely offset the volume drag," Narayan said. "Warranty improvement should also continue to provide a modest tailwind into year-end." The brokerage reduced its price target on the General Motors stock to $98 from $102 while reiterating its outperform rating, citing strong buyback activity. The company's shares were down 1.2% in Wednesday afternoon trade and have fallen 6.4% so far this year. On Tuesday, General Motors' updated 2026 profit guidance fell short of Wall Street's projections at the midpoint, overshadowing a third-quarter beat and a share buyback plan. Electric vehicle losses are seen serving as a "modest" year-over-year tailwind next year, with a more meaningful reduction once the company transitions to lithium manganese-rich batteries in 2028, the RBC analyst said. "Growth in OnStar/Super Cruise and GM Defense provide additional, albeit smaller, tailwinds." EV maker Tesla (TSLA) is scheduled to release its third-quarter results after the closing bell Wednesday, while Ford Motor (F) is scheduled to report Oct. 28. Price: 75.87, Change: -1.22, Percent Change: -1.58