General Motors (GM) has announced that it will write down the value of its China business by over $5 billion. The company’s board of directors determined that non-cash charges are necessary due to a new business forecast and restructuring actions with its joint venture partner, SAIC Motors.
CEO Mary Barra has been transforming GM’s operations in China, where profits have declined in recent years. Despite this, Barra promised investors improvements by the end of 2023, including reduced dealer inventory and modest sales growth.
In the first three quarters of 2023, GM lost $350 million in China. The company expects to incur restructuring costs between $2.6 billion and $2.9 billion and reduce the value of its joint-venture assets by $2.7 billion.
GM partnered with SAIC Motors in the late 1990s and once dominated the Chinese market. However, sales have declined as local automakers like BYD surge forward. ByD sold more than 10 times the number of vehicles as GM’s SAIC-GM joint venture in the first 11 months of 2023.
Other major automakers, including Volkswagen and Nissan, are also struggling in China. Volkswagen is expanding its partnerships with Chinese companies to regain market share, while Nissan is cutting production capacity due to declining sales.
Ford Motor is transforming its presence in China into a vehicle export hub, but some analysts advise Detroit’s automakers to exit the market altogether.
Source: https://www.theguardian.com/business/2024/dec/04/gm-china-loss-value