North America’s vehicle market keeps refusing to behave like a market under this much pressure. High borrowing costs, expensive vehicles, trade uncertainty and volatile energy prices have all given households reasons to postpone major purchases. Yet General Motors says customers are proving more durable than expected.
Speaking at Morgan Stanley’s Laguna Conference on September 15, GM Chief Financial Officer Paul Jacobson said recent industry demand had been somewhat stronger than the company anticipated entering the third quarter. The broader numbers support that observation: the U.S. new-vehicle sales pace reached a 2026 high in August, while Canadian sales posted another year-over-year increase. For GM, the strength is particularly important because profitable pickups and SUVs remain central to its North American business. Still, the resilience comes with an important qualification—the buyers keeping the market moving are not necessarily representative of every household.
The Consumer Has Surprised GM Again
Jacobson described the consumer as one of the defining stories of 2026 for the auto business. Despite uncertainty surrounding inflation, interest rates, energy costs and the broader economy, vehicle demand through the summer proved stronger than GM had anticipated when it entered the third quarter. That does not necessarily mean the market is booming. It means demand is holding up better than many of the pressures surrounding consumers would normally suggest.
August provided one of the clearest examples. Cox Automotive estimated the U.S. seasonally adjusted annual rate of new-vehicle sales at 16.8 million vehicles, the strongest pace of 2026 and the sixth consecutive month above 16 million. NADA reported the same 16.8-million rate, up 1.5% from a year earlier. Raw August volume was roughly 1.38 million vehicles, with calendar differences complicating the year-over-year comparison. For GM, however, the important signal is the underlying pace. Consumers who are still able and willing to buy have kept showroom traffic strong enough to challenge expectations.
Trucks and SUVs Remain GM’s Biggest Advantage
GM’s resilience is tied closely to what North American buyers continue purchasing. The company has repeatedly pointed to pickups and SUVs as a major source of demand, and its second-quarter results showed why. GM delivered 714,896 vehicles in the United States during the quarter. That was down 4% from the previous year, partly because of a smaller EV market, discontinued products and inventory constraints, but GM still remained the country’s largest automaker by sales for the period.
Several individual products produced unusually strong results. GMC recorded its best-ever second-quarter Sierra sales, while Canyon achieved its strongest first half. Chevrolet’s SUV portfolio delivered its best second quarter, with Trailblazer sales up 28% and Traverse sales rising 20%. Buick’s Envista also recorded its best quarter. These are important details because the North American market has become overwhelmingly oriented toward light trucks. GM’s ability to compete across affordable crossovers, large SUVs, commercial trucks and premium pickups gives it more ways to capture demand than a company dependent on one narrow segment.
Strong Demand Is Helping GM Avoid a Discounting Fight
An automaker can sell more vehicles by aggressively cutting prices, but that kind of growth can quickly destroy profitability and weaken resale values. GM is emphasizing a different approach. Jacobson said the company is operating close to maximum production across much of its system, meaning a stronger retail market does not automatically translate into an immediate production surge. Instead, the healthier demand environment gives GM more room to preserve pricing, keep incentives controlled and maintain disciplined inventories.
That strategy has become an increasingly important part of GM’s post-pandemic operating model. Management has repeatedly argued that producing vehicles in line with realistic demand is preferable to filling dealer lots and then clearing excess inventory through heavy discounts. GM said in July that North American pricing remained consistent, while its second-quarter North American adjusted EBIT margin rose to 8.6%, up 2.5 percentage points from a year earlier. The connection matters: strong demand is valuable not simply because another vehicle leaves a dealership, but because it reduces the pressure to sacrifice thousands of dollars per vehicle just to make that sale happen.
The Market Is Strong, but Affordability Is Still a Serious Problem
The durability of vehicle sales looks particularly striking when placed beside the cost of buying one. Kelley Blue Book calculated that the average U.S. new-vehicle transaction price climbed to $50,089 in August, 1.9% higher than a year earlier and above $50,000 for the first time in 2026. Incentive spending averaged 6.5% of transaction prices, down from 7.2% a year earlier. High financing costs add another layer of pressure: J.D. Power and GlobalData estimated July’s average monthly new-vehicle finance payment at $808, while 29.4% of trade-ins carried negative equity.
Those conditions help explain why the strength is sometimes described as a K-shaped market. GM says buyers at the upper end continue choosing premium trims and expensive segments even with interest rates remaining elevated. At the same time, the company has attempted to maintain a broader price ladder. Jacobson noted that GM sold more than 700,000 vehicles in 2025 from nameplates whose starting MSRPs were $30,000 or less. The result is a market where demand can look surprisingly healthy even while affordability remains painful for many households.
Canada Is Showing Its Own Signs of Resilience
The stronger-than-expected story is not confined to the United States. DesRosiers Automotive Consultants estimated that Canadian new light-vehicle sales rose 5.4% year over year in August to approximately 168,000 units, marking the third consecutive month of gains. The seasonally adjusted annualized rate was about 1.86 million vehicles. That remains below the volumes Canada routinely recorded before the pandemic, when August sales often topped 180,000 units, but it represents notable stability given the economic and trade uncertainty facing Canadian households and manufacturers.
Official Statistics Canada figures show why the picture remains more complicated than a simple recovery story. Canadians purchased 176,156 new motor vehicles in July, down 2% from a year earlier, even as the dollar value of those sales increased 1.6%. Zero-emission vehicle sales were a bright spot, rising 36% to 18,920 units and accounting for 10.7% of sales. Canada therefore reinforces the broader North American pattern: consumers have not abandoned the vehicle market, but the mix of what they purchase—and what they pay for it—is changing.
The EV Slowdown Is Reshaping the Sales Mix
One of the largest changes underneath the strong headline sales numbers is occurring in electric vehicles. NADA estimated battery-electric vehicles accounted for just 6.2% of U.S. new-vehicle sales in August 2026, nearly four percentage points below the 10.1% share recorded in August 2025. The earlier period benefited from buyers rushing to use the federal EV tax credit before it disappeared, making the year-over-year comparison unusually difficult, but the direction of the market is clear: U.S. EV demand has cooled considerably.
GM has felt that shift while still maintaining a sizable position in the segment. The company said its overall second-quarter U.S. sales decline partly reflected the smaller EV market, although it remained the No. 2 EV seller nationally. Cadillac achieved its best-ever quarter of EV sales, supported by models including the OPTIQ and VISTIQ. GM therefore has little incentive to abandon electrification entirely. Instead, its broad portfolio allows it to lean harder into gasoline-powered pickups, SUVs and crossovers when buyers favour them while continuing to compete for EV customers. That flexibility has become increasingly valuable as consumer preferences diverge.
Tariffs and Rising Costs Have Not Disappeared
Strong showroom demand does not mean GM is operating in an easy environment. The company’s second-quarter guidance assumed gross tariff costs of between $2.5 billion and $3.5 billion for 2026. GM also projected between $1.5 billion and $2 billion in commodity inflation, including logistics and memory-chip expenses, plus roughly $1 billion to $1.5 billion of additional costs associated with onshoring production, supply-chain investments and higher software spending.
What makes GM’s performance notable is that management raised its full-year outlook despite those pressures. In July, the automaker increased its 2026 adjusted EBIT forecast to between $14 billion and $16 billion, up $500 million from its previous range. GM said stronger operating performance, pricing, warranty improvements and a somewhat better commodity outlook contributed to the revision. Reuters reported that second-quarter adjusted operating profit rose roughly 30% from the prior year. The numbers underline what resilient demand can accomplish: it gives an automaker more ability to absorb external costs without immediately sacrificing pricing or dramatically reducing production.
The Real Test Comes With the Next Silverado and Sierra
GM is not assuming that summer’s resilience guarantees an effortless finish to the year. Jacobson said the fourth quarter is normally seasonally weaker than the second and third quarters, and 2026 will carry an additional complication. GM expects to lose roughly 35,000 truck units as factories transition to the next generation of its full-size pickups. That temporary volume loss matters because the Chevrolet Silverado and GMC Sierra are among the most important profit generators in the company’s North American portfolio.
The trade-off is that those new pickups are central to GM’s expectations for 2027. The next-generation Silverado and Sierra are scheduled to begin reaching showrooms in December, and GM is also expanding U.S. manufacturing as part of an onshoring strategy intended to lift American production capacity above two million vehicles. Management has said that, based on what it currently knows, it believes revenue, margins, adjusted operating earnings and free cash flow can grow in 2027. That outlook still carries risks—including tariff uncertainty, financing costs and an unpredictable economy—but GM enters the transition with something automakers value enormously: customers are still showing up.
