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By Jonathan Guilford

NEW YORK, Feb 26 (Reuters Breakingviews) - General Motors GM.N powered through bruising strikes, rampant supply shortages and a distressing spike in interest rates to generate three times as much cash and become the second-biggest U.S. seller of electric vehicles, behind Tesla TSLA.O. To ease the sting of the latest gloomy signs, boss Mary Barra is turning back to the same section in her manual: return capital to shareholders.

Nearly two years ago, after the United Auto Workers went on strike and GM’s costly EV transition sputtered, Barra unveiled a plan to buy back $10 billion of stock and sweetened the dividend. In 2024, the Chevrolet and Cadillac manufacturer trimmed its promised battery-powered production levels and then set up a new $6 billion repurchase plan. GM now says it intends to buy yet another $6 billion slug of shares and is lifting the dividend 25%, to 15 cents.

Based on Tuesday’s closing price, the first $2 billion outlay, set to happen immediately, should retire 4% of GM’s available equity, lifting earnings per share and in turn the stock price. The decision reflects the company’s ability to chug along even as rival Ford Motor F.N occasionally misfired. Cash flow from GM’s automotive operations, less capital expenditures, more than tripled between 2018 and 2024.

At just 4 times expected earnings over the next 12 months, though, the shares are trading below the 5 times to 6 times they garnered before the pandemic, per LSEG. New potholes always spring up. Chief among them now is President Donald Trump’s threatened 25% tariffs on Canada and Mexico. Only 63% of GM’s North American vehicle assembly occurs at home, the lowest of the Motor City trio, analysts at Jefferies reckon. Barra guesstimates that about half of trade levies can be offset. The optimistic take is that they may not be implemented anyway.

Vehicle buyers are also increasingly failing to pay back loans promptly. The share of borrowers late by 30 days or more has grown past pre-Covid-19 norms, based on data from the Federal Reserve Bank of New York. The silver lining is that, at less than 2% for the in-house automotive finance operations, stress levels are running lower than at large banks and other specialized lenders.

Curbs to EV subsidies also could hurt GM, however. Barra’s latest buyback has no expiration date and it also can be adjusted, but the company is nevertheless sending cash to shareholders just as costs threaten to rise. It’s a celebration of the good times before they roll to a stop.

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CONTEXT NEWS

General Motors said on February 26 that it had authorized a new $6 billion share repurchase program, a third of which is intended to be spent immediately. The program has no expiration date.

The Detroit-based automaker said it also would increase its quarterly dividend to 15 cents a share from 12 cents a share.

(Editing by Jeffrey Goldfarb and Pranav Kiran)

((For previous columns by the author, Reuters customers can click on GUILFORD/ Jonathan.Guilford@thomsonreuters.com))