General Motors (NYSE:GM) will report its second-quarter earnings result before the market opens on Wednesday, July 25. Here's a look at what to expect.

What Wall Street expects

Wall Street analysts polled by Thomson Reuters expect GM to report adjusted earnings of $1.81 per share, on average, down a bit from the $1.89 it earned on the same basis in the second quarter of 2017.

The analysts also expect GM to report revenue of $36.86 billion, also down a bit from its year-ago result of $36.98 billion.

A blue 2018 Chevrolet Silverado pickup

Strong sales of the outgoing 2018 Chevrolet Silverado likely helped GM's profit margin in the second quarter. Image source: General Motors.

Strong SUV and truck demand in the U.S. should help earnings

GM's U.S. sales rose 4.6% in the second quarter. The revamped lineup of crossover SUVs continued to do well, with sales of the group up 5.8%. The company also sold a lot of profitable pickups (up 21.2%) as it began the sell-down of Chevrolet Silverados and GMC Sierras, ahead of the arrival of all-new models at the end of 2018.

Despite the truck sell-down, GM was able to get strong pricing in the U.S. in the second quarter. Edmunds estimates that GM's average transaction price rose 3.7% from a year ago, to $40.569. Its incentive spending was also up from a year ago (by 8.1%, to $4,125 per vehicle), according to Edmunds' estimate.

The increased incentive spending is no surprise given the truck sell-down, and I don't think it's a worry for investors. The strong average transaction price, which takes incentives into account, suggests that GM was probably able to maintain good profit margins.

An overall gain in China, despite a drop in Buick sales

In China, GM weathered a surprising slump in Buick sales to eke out a 0.7% sales gain in the second quarter. Strong sales at its Chevrolet, Cadillac, and low-cost Baojun brand were just enough to offset a 16% decline in sales of its historically best-selling Buick brand.

GM is likely to tell us that it expects its China sales to pick up as the year goes on. It released a revamped version of its Buick Excelle (a compact sedan that has long been one of its China best-sellers) at the end of June, and it has 10 more new or revamped models coming to China between now and year-end. Several are SUVs, including the compact luxury Cadillac XT4 -- a model that could hit a sales sweet spot in China.

What to watch for: News about Cruise

Is GM planning to spin off Cruise Automation, its self-driving subsidiary -- and if so, will that be announced during the second-quarter earnings call? Some recent moves offer tantalizing hints at the possibility:

Cruise is almost certainly significantly undervalued as part of GM. On its own -- or with its own tracking stock, at least -- its value might be more fully recognized by the market. Such a spinoff would be big news for GM investors: It's a safe bet that GM shareholders would receive shares in Cruise, a potential windfall.

It's also a safe bet that it'll be big news if and when it's announced.

A GM Cruise self-driving taxi, a small white hatchback with visible self-driving sensor hardware

Will GM announce a spinoff of its Cruise Automation self-driving subsidiary this week? Image source: General Motors.

The upshot: GM should have a good day on Wednesday

Regardless of whether my guess about a Cruise spinoff turns out to be right (or whether it gets announced this week), GM looks likely to have a good day on Wednesday. Assuming that GM's cost-management efforts continued to be as effective in the second quarter as they have been in the recent past, I suspect the good crossover and truck sales will have given the company enough to beat Wall Street's estimates by a bit. We'll find out on Wednesday morning.