General Motors CEO Mary Barra said in October the company would stick it out in China but that it planned to restructure.
Photo: Anna Moneymaker / GETTY IMAGES NORTH AMERICA/Getty Images via AFP/File
Source: AFP
General Motors announced Wednesday it will book more than $5 billion in losses and write-downs due to the restructuring of its China joint-venture.
Facing heavy competition in China that has forced automakers to cut retail prices, the SAIC General Motors Corporation is restructuring operations, resulting in non-cash impairment of between $2.6 and $2.9 billion and equity losses of around $2.7 billion, GM said in a securities filing.
GM and the Chinese state-owned company Shanghai Automotive Industry Corporation (SAIC) each own 50 percent of the company.
In October, GM reported a loss in equity income from China for the third straight quarter.
Chief Executive Mary Barra, who has divested several other GM overseas operations, emphasized at the time that the company saw a future for itself in the world’s biggest automotive market.
“We believe we can turn around the losses,” Barra said on an analyst conference call.
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China has a “very challenging environment,” she said. “But we do believe there’s a place we can participate in a very different manner and do that profitably.”
Foreign companies from the United States, Germany and other countries have been operating in China since the 1980s, with Beijing requiring them to partner with Chinese companies, which had lagged behind in the global auto sector.
But in recent years, Chinese car companies have progressed significantly, embracing artificial intelligence and other gadgetry and leapfrogging foreign players with efficient electric vehicle offerings that are priced aggressively.
Chinese company BYD has been symbolic of the rise, recently surpassing Tesla in quarterly revenue for the first time.
Wednesday’s moves reflect a determination that the loss in value across the China venture is “other than temporary” in light of the actions “to address market challenges and competitive conditions,” GM said in the filing.
The actions, which include plant closures, will mostly be recorded in the fourth quarter of 2024, GM said.
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GM shares rose 0.2 percent in early trading.
Source: AFP