Employees work on a Buick Envision SUV at the General Motors Dongyue Assembly Plant (officially known as SAIC-GM Dongyue Automobile Co., Ltd.) in Yantai, Shandong Province, China, on November 17, 2022.
Tangke|Visual China Group|Getty Images
Detroit – General Motors It is expected to reorganize its SAIC Motor Corporation The Detroit automaker takes more than $5 billion in non-cash charges and write-downs in China disclosed in federal documents Wednesday morning.
General Motors said it expects to write down the value of its Chinese joint venture by $2.6 billion to $2.9 billion. The company also expects to pay an additional $2.7 billion in business restructuring costs, including “factory closures and portfolio optimization,” according to the filing.
GM previously announced plans to restructure its China operations but did not disclose any other details about the expected closures.
“As we have always said, we are focused on capital efficiency and cost control, and have been working with SGM to turn around the China business to achieve sustainable development and profitability in the market. We are about to finalize a restructuring plan with SGM. General Motors said in “We expect our performance in China to improve in 2025 compared with the same period last year,” the company said in an emailed statement.
GM said it believed the joint venture “has the ability to restructure without new cash investments from U.S. automakers.”
The majority of the restructuring costs are expected to be recognized as non-cash special items charges in the fourth quarter. That means they will impact the automaker’s net profit but not its adjusted EBIT, a key metric Wall Street monitors.
Over the past decade, GM’s business in China has transformed from a profit engine to a liability as competition intensifies from government-backed domestic automakers fueled by nationalism and a generational shift in consumer attitudes toward the auto industry and electric vehicles engine.
Equity revenue from GM’s China 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 plummeted from about 15% in 2015 to 8.6% last year, the first time it fell below 9% since 2003. That number has grown 78.5% since peaking in 2014, according to regulatory filings.
Sales of GM’s U.S. brands such as Buick and Chevrolet have fallen more than those of its joint ventures with SAIC and Wuling Motors. Of the 2.1 million cars sold in China last year, joint venture models accounted for about 60%.
Before this year, GM’s only quarterly losses in China since 2009 were a $167 million loss in the first quarter of 2020 due to the coronavirus pandemic, and an $87 million loss in the second quarter of 2022.
Detroit automaker reports Three consecutive quarters of losses Equity income from China operations totaled $347 million this year. That included a loss of $137 million in the third quarter.
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