China Has Become A Liability For General Motors
General Motors is taking a hard look at its struggling Chinese operations, with plans to restructure its joint venture with SAIC Motor Corp.
The move, disclosed in a regulatory filing, will result in more than $5 billion in non-cash charges and writedowns. GM expects to write down between $2.6 billion and $2.9 billion on its joint-venture operations in China. Add to that another $2.7 billion for restructuring, which includes plant closures and trimming its portfolio. There are currently no details on which plants or models are on the chopping block.
China used to be GM’s golden goose—a decade ago GM held a commanding 15% market share, today that number has crumbled to 8.6%, the lowest in over 20 years. Equity income from its Chinese operations has dropped a staggering 78.5% since its peak in 2014. What was once a profit engine is now a liability.
This year alone, GM has posted three consecutive quarterly losses in China, totaling $347 million. For a company that once raked in billions from its Chinese business, it’s a bitter pill to swallow.
GM’s struggles in China are emblematic of the issues facing many legacy Western automakers in China. Nationalism fuels consumer preferences, and homegrown EV makers, backed by the government, are eating into the market share of once-popular foreign brands.
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An experienced automotive storyteller and accomplished photographer known for engaging and insightful content. Michael also brings a wealth of technical knowledge—he was part of the Ford GT program at Multimatic, oversaw a fleet of Audi TCR race cars, ziptied Lamborghini Super Trofeo cars back together, been over the wall during the Rolex 24, and worked in the intense world of IndyCar.
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