Employees work on Buick Envision SUVs at General Motors’ Dong Yu assembly plant, officially known as SAIC-GM Dong Yu Motors Co., Ltd., in Yantai, Shandong province, China, on November 17, 2022.
Tang K | Visual China Group | Getty Images
Detroit – General Motors It also expects to restructure its joint venture operations SAIC Motor Corporation More than $5 billion in non-cash charges and write-downs in China, Detroit automaker disclosed in a federal filing Wednesday morning.
GM said it expects to write down the value of its joint venture operations in China by between $2.6 billion and $2.9 billion. It expects to take another $2.7 billion charge to restructure the business, including “plant closures and portfolio optimization,” according to the filing.
GM which announced the plans earlier Restructure operations In China, no additional details were disclosed about the expected closures.
“As we have consistently said, we are focused on capital efficiency and cost discipline and are working with SGM to turn around the business in China to become sustainable and profitable in the market. We are close to finalizing our restructuring plan with our partner, and we expect our results in China to show year-over-year improvement in 2025.” GM said in an emailed statement.
GM said the joint venture “has the ability to be restructured without new cash investments” from the American automaker.
The majority of restructuring charges are expected to be recognized as non-cash, special item charges in the fourth quarter. That means they affect the automaker’s net income, but not its adjusted earnings before interest and taxes — a key metric monitored by Wall Street.
GM’s operations in China have changed From profit engine to liability Competition has been growing from government-backed domestic automakers fueled by nationalism over the past decade, and Generational change in consumer perceptions The automotive industry and electric vehicles will take over.
Equity earnings from GM’s Chinese operations and joint ventures peaked at more than $2 billion in 2014 and 2015.
GM’s market share in China, including its joint ventures, has fallen from about 15% in 2015 to 8.6% last year — the first time it has fallen below 9% since 2003. GM’s equity return from operations also fell, down 78.5% from a peak in 2014, according to regulatory filings.
GM’s US-based brands, Buick and Chevrolet, have seen lower sales than joint ventures with SAIC Motor, Wuling Motors and others. About 60% of the 2.1 million vehicles sold in China last year were joint venture models.
Before this year, the only quarterly losses for GM in China since 2009 were a $167 million deficit in the first quarter of 2020 and an $87 million loss in the second quarter of 2022 due to the coronavirus pandemic.
The Detroit automaker reported Three consecutive quarters of losses Equity returns for its Chinese operations totaled $347 million this year. That includes a $137 million loss in the third quarter.
