General Motors Co. will incur two noncash charges of more than $5 billion for recognizing the change in value of its joint-venture business in China and restructuring costs there, according to a Wednesday filing with the Securities and Exchange Commission.
GM expects a $2.6 billion to $2.9 billion write-down, or reduction in value on its investment, in its China joint venture. It will also see an expected loss of $2.7 billion resulting from restructuring the business, which includes “plant closures and portfolio optimization,” the filing states. A majority of the charges will be recorded in the fourth quarter, GM noted in the filing.
GM and other U.S. automakers are struggling in China amid increasing domestic competition and changing consumer behavior there. GM has lost $329 million in China this year. In the third quarter, GM and its partners reported a 21% year-over-year drop in sales there. GM did see quarter-to-quarter gains. The automaker’s 14.3% sequential growth rate there was the highest it’s seen since the third quarter of 2022.
On GM’s third-quarter earnings call, CEO Mary Barra told investors in the fourth quarter in China there would be “a series of shareholder and joint-venture board meetings … that will be focused on restructuring actions to make the business sustainable and profitable.”
In China, GM owns an equity interest in SAIC General Motors Corp. Ltd., or SGM, a 50-50 joint venture with SAIC Motor Corp. Ltd.
“As we have consistently said, we are focused on capital efficiency and cost discipline and have been working with SGM to turn around the business in China in order to be sustainable and profitable in the market. We are close to finalizing our restructuring plan with our partner, and we expect our results in China in 2025 to show year-over-year improvement,” GM said in an emailed statement.
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