We know that auto tariffs are kind of a touchy subject right now. Off again, on again, huge, delayed…these have the potential to scuttle large parts of countries’ economies all over. But for legacy automaker General Motors ($GM), the tariffs are more than a mild inconvenience. In fact, the tariffs may be costing Americans access to an entry-level SUV: the Chevy Trax. Despite this, GM stock still gained fractionally in Wednesday afternoon’s trading.
The Chevy Trax is something of an unusual model. It is made entirely in South Korea, reports note, one of several breeds of SUV available for under $30,000 retail. That makes them attractive buys to the “entry-level SUV” buyer, particularly the one who is not buying a used car. And the Trax has proven an attractive buy; car critics have had a lot of praise for it, and ordinary buyers are snapping them up.
But with the new tariffs, there is a very real potential that the Trax may not only lose ground, but potentially be wiped out altogether. Greater New Orleans Chevy dealer Matt Bowers noted, starkly: “It would kill it.” Currently, Trax models tend to sell out rapidly, with few lasting a week on the lot. But if Trax prices suddenly grew to match tariffs, that would effectively be the end of the Trax’s biggest selling point.
Massive Recall
Normally, when the topic of recalls comes up, they are focused on one of GM’s biggest competitors, Ford ($F). But recently, reports emerged of a massive recall that hit home for GM, with around 900,000 vehicles impacted by the move. And the reason for the recall is almost frightening: defective engines.
The National Highway Traffic Safety Administration (NHTSA), via its Basic Safety Administration arm, began looking at the cars in question, and an extremely large recall could be in the offing before too much longer. Covering Silverado, Suburban, Tahoe, Escalade, Sierra and Yukon models from 2019 to 2024, a “bearing failure issue” has come to light in 39 vehicles so far, which ultimately led to engines seizing up outright or causing “blocking material fractures” that resulted in injury.
Is GM a Good Stock to Buy Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on GM stock based on seven Buys, six Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 6.8% rally in its share price over the past year, the average GM price target of $55.10 per share implies 23.18% upside potential.
