General Motors’ GM latest agreement with Unifor strengthens its commitment to Canadian manufacturing, with more than C$1 billion in investments tied to the company’s Ontario operations. The three-year contracts, covering more than 4,600 workers, were approved by union members. The deal follows a similar agreement Unifor reached with Ford F in July, including 3% annual wage increases and improvements in benefits and job security.
For GM, however, the biggest takeaway for investors is the production visibility the deal provides. General Motors will spend C$144 million to bring next-generation Heavy-Duty GMC Sierra production to Oshawa and C$215 million to assemble a next-generation transmission at St. Catharines, with work expected to begin in late 2029. The agreement also incorporates GM’s previously announced C$691 million investment in next-generation V-8 engine production and C$63 million for additional Oshawa upgrades.
The deal is notable given the uncertainty surrounding U.S.-Canada trade. GM has also agreed not to sell or close its idled CAMI Assembly plant in Ingersoll during the contract period and will pursue measures to mitigate potential layoffs at Oshawa.
Overall, the agreement gives GM greater visibility into future production of trucks, engines and transmissions while reinforcing its Canadian manufacturing base. But is this enough to make GM stock a buy now? Let’s take a closer look.
Factors Supporting GM’s Prospects
GM’s biggest strength remains its North American truck and SUV business, where the company has maintained pricing discipline rather than relying on heavy discounts to drive sales. Incentives have stayed below the industry average for more than three years, helping protect profitability. This strategy is showing results, with GM North America’s adjusted EBIT margin recovering to 8.6% in the second quarter and 9.3% in the first half, putting the business back within management’s 8%-10% target range.
The launch of next-generation Chevrolet Silverado and GMC Sierra models, higher full-size SUV capacity and greater U.S. production could support revenue and margins in 2027. Management has raised its 2026 adjusted EPS guidance to $12-$14 and expects 2027 results to exceed 2026.
General Motors is also making progress in China, where restructuring and cost reductions helped first-half equity income more than double to $248 million from $116 million a year earlier. At the same time, OnStar and Super Cruise are expanding GM’s recurring-revenue base, with more than $3 billion of recognized and deferred revenues expected in 2026. GM expects to add about 1 million subscribers and surpass 850,000 Super Cruise subscribers by year-end. GM Energy, GM Defense and GM Insurance offer additional growth avenues.
Strong cash generation further supports shareholder returns. GM has repurchased $2.8 billion of stock so far this year, with another $3.5 billion remaining under its authorization.
Cost Pressures Cloud the Near-Term Outlook
GM nevertheless faces several headwinds that could weigh on profitability. Commodity and logistics inflation is expected to cost the company $1.2-$1.7 billion in 2026, while gross tariff exposure remains estimated at $2.5-$3.5 billion. Although lower gross costs and potential IEEPA refunds could offset part of the impact, GM also expects higher onshoring expenses as it shifts more production to the United States. Near-term results are likely to reflect these pressures.
Management also expects fourth-quarter performance to be weaker than normal seasonal trends because of higher launch-related costs and an anticipated year-over-year production headwind of roughly 35,000 units during the transition. The transfer of Escalade production to the Orion Assembly plant is also expected to create its largest onshoring impact in the fourth quarter.
Thus, GM enters the coming period with a resilient core business and several growth opportunities, but elevated costs and production-transition pressures could temper earnings momentum in the near term.
The Zacks Rundown on General Motors
Over the last six months, GM stock has risen 11%, outpacing the industry’s decline. The stock also outperformed its closest peers, Ford and Stellantis STLA. Over the same timeframe, shares of Ford gained roughly 4%, while Stellantis shares declined 29%.
6-Month Price Performance Comparison
Image Source: Zacks Investment Research
The stock is trading at 6.05X forward earnings, lower than Ford’s 7.27X and Stellantis’ 6.66X. GM has a Value Score of A.
General Motors’ P/E F12M Vs. F and STLA
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for GM’s 2026 and 2027 EPS implies year-over-year growth of 25% and 11%, respectively. The consensus mark for 2026 and 2027 EPS has moved up over the past 60 days.
Image Source: Zacks Investment Research
Our Take
GM’s fundamentals are improving, but the stock does not yet offer a strong enough risk-reward profile to justify a clear “Buy” call. Its disciplined North American operations, product investments, recurring-revenue opportunities and shareholder returns provide a solid foundation for longer-term growth.
However, tariff uncertainty, rising costs and production-transition pressures could limit earnings momentum in the near term. With management already expecting a softer fourth quarter, investors may be better served waiting for greater clarity on margins and cost pressures.
Thus, GM stock is not an attractive investment option now. But existing investors should retain the stock for the long haul. GM carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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