General Motors expects significant costs from restructuring its joint venture operations with SAIC Motor Corp. in China, including noncash charges and write-downs valued at over $5 billion.
The Detroit automaker anticipates a major overhaul of the joint-venture operations, which will include plant closures and portfolio optimization. The majority of these costs are expected to be recognized as noncash special item charges during the fourth quarter.
GM’s operations in China have struggled due to increased competition from government-backed domestic automakers and shifting consumer perceptions. Market share has plummeted from 15% in 2015 to 8.6% last year, resulting in a significant decline in equity income from $2 billion in 2014 and 2015.
The company aims to turn around the business with cost discipline and capital efficiency measures. GM expects to finalize its restructuring plan with SAIC Motor Corp. by next year, making the operations profitable on a smaller scale without incremental cash investments.
Notably, most of the costs will impact net income but not adjusted earnings before interest and taxes (EBITDA). This is significant for Wall Street analysts who closely monitor EBITDA as a key metric.
Source: https://www.cnbc.com/2024/12/04/gms-expects-more-than-5-billion-impact-from-china-restructuring-including-plant-closures.html