General Motors Interest Expense and Interest Coverage Ratio

Looking at a GM’s building at a traffic light stop. Source: Flickr Image

This article presents GM’s interest coverage ratio with respect to the operating income (GAAP) and EBIT-adjusted (non-GAAP).

Let’s explore!

For other statistics of General Motors, you may find more information on these pages:

Sales (Retail)

• GM sales by country: U.S., China, Brazil, U.K., etc.,
• GM sales by region: America, Asia, MEA, and Europe,

Wholesales

• GM wholesales by region: America, Asia, MEA, and Europe,

Market Share

• Market share by region: America, Asia, and Europe,
• Market share by country: U.S., China, Brazil, U.K., etc.,

U.S. Sales & Market Share

• Sales of truck, car, and SUV,
• Market share of truck, car, and crossover,
• U.S. EV sales and market share,

Revenue

• GM revenue sources: sales of new and used vehicles, services, etc.,
• GM revenue by segment: GMNA, GMI, GM Financial, and Cruise,

GM China Statistics

• GM China: vehicle sales, revenue, profitability, and market share,

Please use the table of contents to navigate this page.

Definitions

To help readers understand the content better, the following terms and glossaries have been provided.

Interest Coverage Ratio: The Interest Coverage Ratio (ICR) is a financial metric that determines how well a company can pay the interest on its outstanding debt. It is calculated by dividing a company’s earnings before interest and taxes (EBIT) by its interest expenses for the same period. The formula looks like this:

Interest Coverage Ratio = Earnings Before Interest and Taxes (EBIT) / Interest Expenses

A higher ratio indicates that the company is more capable of meeting its interest obligations from operating earnings, suggesting better financial health. Conversely, a lower ratio suggests the company may have difficulty covering its interest payments, indicating potential financial strain. This ratio is of particular interest to lenders and investors as it provides insight into the risk associated with lending to or investing in the company.

Adjusted EBIT: General Motors presents the EBIT-adjusted net of non-controlling interests.

This non-GAAP measure is used by GM’s management and can be used by investors to review the company’s consolidated operating results because it excludes automotive interest income, automotive interest expense and income taxes, and certain additional adjustments that are not considered part of its core operations.

Examples of adjustments to EBIT include but are not limited to, impairment charges on long-lived assets and other exit costs resulting from strategic shifts in operations or discrete market and business conditions and certain costs arising from legal matters.

Back To Table Of Contents

Insight & Summary of GM’s Automotive Interest Coverage Ratio

The following analysis consolidates the trends observed across GM’s interest expense and income for the 2015–2025 period.

• Automotive Interest Expense: Rising Through 2020, Then Moderating. GM’s automotive interest expense rose steadily from $443M in 2015 to a peak of $1,098M in 2020, driven by a combination of the general interest rate environment and increased debt utilization during the COVID-19 period. Since 2020, interest expense has declined materially — to $727M in 2025 — as GM reduced automotive debt and benefited from refinancing activity. The 3-year average of $828M is the lowest three-year average since 2016–2018, reflecting meaningful balance sheet deleveraging in the automotive segment. In absolute terms, interest expense has never been a large burden relative to GM’s revenue or income, but its trajectory matters as an input to coverage metrics.

• Operating Income: Volatile and Now Under Pressure. Operating income has been the most volatile line in the dataset, ranging from $2.9B in 2025 (the lowest since 2018) to $12.8B in 2024. The sharp decline from $12.8B to $2.9B between 2024 and 2025 is the most significant single-year contraction in the dataset and is the primary driver behind the 3-year average of $8.3B — a figure that understates GM’s normalized earning power in better years. The 2025 drop likely reflects significant one-time charges, restructuring costs, or impairments that are not representative of ongoing operations, as the Adjusted EBIT of $12.7B in 2025 remains robust — confirming that the operating income weakness is largely non-recurring.

• Adjusted EBIT: The More Reliable Signal. Adjusted EBIT strips out one-time items and provides the clearest view of GM’s underlying earnings power. It has ranged from $8.4B in 2019 to $14.9B in 2024, with a 3-year average of $13.3B — meaningfully higher and more stable than reported operating income. Crucially, 2025 Adjusted EBIT of $12.7B is nearly unchanged from 2023 ($12.4B), demonstrating that the business’ core profitability has been maintained even as reported operating income collapsed. For investors and creditors assessing GM’s true debt-service capacity, Adjusted EBIT is the appropriate numerator.

• Operating Income Coverage Ratio: Unreliable Due to Earnings Volatility. The Operating Income-to-Interest Coverage ratio has swung dramatically — from a high of 17.2x in 2017 to a low of 4.0x in 2025. The 3-year average of 9.8x is technically adequate but masks the deterioration: the 2025 reading of 4.0x is the weakest in the dataset outside of the COVID-impacted 2020 (6.0x). A coverage ratio of 4.0x on reported operating income is not distress-level — GM’s actual cash generation remains strong — but it warrants scrutiny. This ratio’s volatility makes it a poor standalone metric for assessing GM’s financial health, as a single quarter of charges can distort it significantly.

• Adjusted EBIT Coverage Ratio: Consistently Strong. The Adjusted EBIT-to-Interest Expense ratio has been far more stable, ranging from 8.8x in 2020 to 24.4x in 2015, with a 3-year average of 16.3x. Even in the worst year for this metric (2020), coverage remained nearly 9x — a comfortable buffer. The 2025 figure of 17.5x, near the 3-year average, confirms that on an adjusted basis, GM’s interest burden is well within manageable bounds and does not represent a structural concern. The compression from early-period highs (24.4x in 2015, 22.2x in 2017) to mid-teens in recent years reflects the combined effect of rising interest expense through 2020 and modest income growth — not deteriorating credit quality.

• Structural Takeaway: GM’s interest coverage profile is bifurcated: reported operating income coverage is volatile and unreliable as a standalone indicator, while Adjusted EBIT coverage is consistently strong and confirms the underlying business can service its automotive debt with substantial margin. The 2025 reported operating income trough is an anomaly rather than a trend. For creditors and fixed-income investors, the Adjusted EBIT ratio of 16.3x (3-year average) provides confidence that GM’s automotive debt obligations are well-covered. For equity investors, the more relevant question is what drives the normalization of reported operating income — and whether the one-time charges embedded in 2025 are truly non-recurring.

The table below combines all key interest expense and coverage ratio metrics into a single view for the latest three fiscal years.

Back To Table Of Contents

Automotive Interest Expense, Operating Income, and Adjusted EBIT

The definition of GM’s adjusted EBIT is available here: adjusted ebit.

Back To Table Of Contents

Interest Coverage w.r.t. Operating Income and Adjusted EBIT

The definition of GM’s interest coverage ratio is available here: interest coverage ratio.

Back To Table Of Contents

References and Credits

1. All financial figures presented in this article were obtained and referenced from GM’s annual and quarterly reports, SEC filings, investors presentations, press releases, earnings reports, etc., which are available in GM Investor Relations.

2. Flickr Imges

Back To Table Of Contents

Disclosure

We may use the assistance of artificial intelligence (AI) tools to produce some of the text in this article. However, the data is directly obtained from original sources (usually the quarterly and annual reports) and meticulously cross-checked by our editors multiple times to ensure its accuracy and reliability.

If you find the information in this article helpful, please consider sharing it on social media. Additionally, providing a link back to this article from any website can help us create more content like this in the future.

Thank you for your support and engagement! Your involvement helps us continue to provide high-quality, reliable content.

Back To Table Of Contents