Joseph White and Paul Lienert

DETROIT, (Reuters) – General Motors Co. (NYSE:) & Ford Motor (NYSE.:) Co. will announce first quarter results this week. This is a hostile environment than the executives anticipated when they last met investors in January.

Two Detroit automakers made January’s forecasts that the economic effects of war in Ukraine and supply disruptions in Ukraine would have a devastating impact on their future plans. Inflation, rising U.S. rates, and inflation all present a serious threat.

Since January, shares of both companies have fallen sharply. Used car sellers reported lower results this week Carvana Co (NYSE 🙂 and Carmax Inc both spooked investors worried about inflation’s effect on U.S. consumer spend.

GM forecasted in January that wholesale deliveries could increase by 25%-30% over 2021. They also predicted that commodities and logistics prices would rise by $2.5B. According to GM, the company expects to make $13 billion-$15 billion in pretax profits.

Evercore ISI stated that they aren’t sure if there will be a slight cut at the top of the ’22 Guide. This was in a note prior to GM’s quarterly release on Tuesday.

Evercore stated that Ford will report results Wednesday and expect a decrease in its outlook through 2022. Evercore pointed out that Ford is highly exposed to rising aluminum prices, which has led to increased costs for its F-150 pickup as well as other cars.

John Lawler was Ford’s chief finance officer in early March. He reiterated the company’s pretax profit forecast of $11.5 to $12.5 billion for 2022. Jim Farley and Ford’s chief executive from Dearborn in Michigan have set out an ambitious agenda. They plan to separate Ford’s internal and external combustion engine technology operations.

Both GM and Ford must deal with the high costs associated with launching electric cars. GM has increased production of its Cadillac Lyriq crossovers, and GMC Hummer trucks. Ford will launch the regular production of its F-150 Lightning electric pickup truck on Tuesday.

Both companies are experiencing slowdowns in vehicle production due to supply-chain issues. In 2021, the impact of lower sales volumes was partially offset by higher prices. Consumers will have to be more patient as rising interest costs make it difficult for them to continue paying higher.

China is GM’s biggest market. GM’s China deliveries fell 21% over the quarter. GM sales in the United States fell 20% during the first quarter. Ford U.S. sales declined by 17% compared to last year.