General Motors Co. (NYSE:GM)

Total debt exhibited a consistent upward trend over the five-year period. Both short-term obligations and long-term debt contributed to this increase, though at differing rates. A closer examination reveals shifts in the composition of the company’s debt structure.

Overall Debt Trend

The carrying amount of total debt increased from US$109,379 million in 2021 to US$130,277 million in 2025, representing a cumulative increase of approximately 19.1%. The rate of increase was not constant; acceleration was observed between 2022 and 2024.

Short-Term Debt

Short-term debt and the current portion of long-term debt fluctuated modestly. It rose from US$33,720 million in 2021 to a peak of US$39,432 million in 2024 before decreasing to US$35,668 million in 2025. This suggests a potential strategy of managing short-term financing needs, with a slight reduction in reliance on these instruments in the most recent year.

Long-Term Debt

Long-term debt, excluding the current portion, demonstrated a more pronounced and consistent upward trajectory. It increased from US$75,659 million in 2021 to US$94,609 million in 2025, a rise of approximately 25.0%. This indicates a greater reliance on long-term financing over the period. The increase accelerated notably between 2022 and 2024, with a smaller increase in 2025.

Debt Composition

In 2021, short-term debt represented approximately 30.8% of total debt. By 2025, this proportion had decreased to approximately 27.3%. Conversely, long-term debt’s share of the total increased from roughly 69.2% in 2021 to 72.7% in 2025. This shift suggests a strategic move towards a more stable, long-term debt structure.

The observed trends indicate a growing overall debt burden, primarily driven by increases in long-term financing. While short-term debt experienced some fluctuation, the overall pattern suggests a deliberate shift towards a greater proportion of long-term obligations.

The automotive interest expense for the period exhibited a generally decreasing trend from 2021 to 2023, followed by increases in the subsequent two years. Interest capitalization, a component not present in earlier periods, began to be reported in 2024 and increased through 2025. Overall interest costs incurred mirrored the expense trend, with the addition of capitalized interest impacting the later years.

Automotive Interest Expense

Automotive interest expense decreased from $950 million in 2021 to $911 million in 2023, representing a reduction of approximately 4.1%. However, this was followed by increases to $846 million in 2024 and $727 million in 2025. The decrease from 2023 to 2025 suggests potential debt reduction or refinancing at lower rates, although the fluctuations require further investigation.

Interest Capitalized

Interest capitalization was not reported in 2021, 2022, or 2023. It first appeared in 2024 at $215 million and increased to $316 million in 2025. This indicates a rise in qualifying expenditures, such as those related to the development of new assets, where interest costs are added to the asset's cost rather than expensed immediately. The increasing capitalization suggests a growing level of investment in long-term projects.

Interest Costs Incurred

Total interest costs incurred followed a similar pattern to automotive interest expense through 2023, remaining relatively stable around the $950 million mark. In 2024, interest costs increased to $1,061 million, reflecting the inclusion of $215 million in capitalized interest. This trend continued in 2025, with total interest costs at $1,043 million, driven by both a lower automotive interest expense and a higher amount of capitalized interest ($316 million). The net effect of these offsetting movements resulted in a slight decrease in total interest costs from 2024 to 2025.

The combination of decreasing automotive interest expense and increasing interest capitalization suggests a shift in how financing costs are being treated, potentially linked to changes in investment strategy and project funding. Further analysis, including a review of the company’s debt structure and capital expenditure plans, would be necessary to fully understand these trends.

The interest coverage ratios demonstrate a declining trend over the five-year period. Both the standard interest coverage ratio and the adjusted interest coverage ratio, which incorporates capitalized interest, show decreases in their respective values from 2021 to 2025.

Interest Coverage Ratio (without capitalized interest)

The interest coverage ratio, excluding capitalized interest, begins at 14.39 in 2021 and gradually decreases to 5.29 by 2025. The decline is moderate from 2021 to 2023, moving from 14.39 to 12.42. A more pronounced decrease is then observed between 2023 and 2024, falling to 11.07, followed by a substantial drop to 5.29 in 2025.

Adjusted Interest Coverage Ratio (with capitalized interest)

The adjusted interest coverage ratio, which includes the effect of capitalized interest, mirrors the overall downward trend. Starting at 14.39 in 2021, it decreases to 3.69 in 2025. Similar to the standard ratio, the decline is more gradual through 2023, reaching 12.42. However, the adjusted ratio experiences a more significant reduction from 2023 to 2024, decreasing to 8.83, and then a further substantial decline to 3.69 in 2025.

Comparison of Ratios

The adjusted interest coverage ratio is consistently lower than the standard interest coverage ratio across all reported years. This difference is attributable to the inclusion of capitalized interest in the adjusted calculation, which reduces the earnings available to cover interest expense. The gap between the two ratios widens from 2021 to 2025, indicating that capitalized interest is playing an increasingly significant role in reducing the company’s ability to cover its interest obligations.

The substantial declines in both ratios, particularly in 2024 and 2025, suggest a weakening capacity to meet interest expense obligations. Continued monitoring of these ratios is warranted to assess the sustainability of the company’s debt levels.