General Motors told shareholders on Wednesday that it would record more than $5 billion in two non-cash charges in the fourth quarter due to ailing business in China, causing the automaker to make fewer models and close down manufacturing plants.
GM will reduce its joint-venture value with China’s state-owned SAIC Motor by $2.6 billion to $2.9 billion, and the automaker estimates restructuring costs will be $2.7 billion. The Detroit-based automaker partners with SAIC to produce Buick, Cadillac, and Chevrolet vehicles.
In the first three quarters of this year, GM lost about $350 million throughout the region, and in March, SAIC planned to cut thousands of jobs, including within its joint venture with GM.
In October, GM CEO Mary Barra told investors there would be “a significant reduction in dealer inventory and modest improvements in sales and share” by the end of the year.
“The operating environment in China continues to be challenging and there is more hard work to do with our partner,” Barra said.
Chinese automakers such as BYD have become more dominant than automakers such as GM and Volkswagen as they have met the increased demand for more electric vehicles and plug-in hybrids. While GM-SAIC sold only 370,989 units in the first 11 months of 2024, a sales decrease of 59%, BYD sold more than 10 times the number of cars in the same period.
GM’s shares were down 2.7% after its announcement on Wednesday, but prior to President-elect Donald Trump‘s Mexico–Canada tariff announcement in November, GM’s shares were up 49%.
GM’s shares fell 7% on Nov. 26 after Trump posted his tariff declaration, as the proposed tariffs threaten GM’s five Mexico-based manufacturing plants.
China’s increased success is a warning sign for automakers and politicians alike as the likelihood of BYD moving production into Mexico to export products into the U.S. grows. Last year, BYD bought an abandoned Ford Motor manufacturing base in Brazil, taking the first step in moving its production into Latin America.
In November, BYD said it was considering building a manufacturing plant in Mexico, according to the Wall Street Journal. About 10% of new cars sold in Mexico are Chinese brands, making it a prime location to set up shop and export to the U.S.
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Even with China’s auto dominance, GM hopes to continue its SAIC partnership to revive sales in the country and compete again with Chinese companies such as BYD.
During Wednesday’s investors meeting, GM Chief Financial Officer Paul Jacobson said that throughout 2025, the company is going to work toward gaining profitability in China again.
This article was originally published at www.washingtonexaminer.com
