GM fights in China and announces massive restructuring costs
GM fights in China and announces massive restructuring costs
China, once the largest and most important market for General Motors (GM), has developed into a major problem for the company. On Wednesday, GM informed its shareholders that it would not be recorded by over $ 5 billion in relation to its joint venture in China. These consist of a restructuring and a reduced assessment.
restructuring costs and reduced values
GM expects that the cost of restructuring will be between $ 2.6 and $ 2.9 billion, while the amount for the reduced joint venture assessment could be around $ 2.7 billion. Before the start of the trade, the company's shares fell by 2.7%.
partnership with Saic Motors
in China, GM works with Saic Motors to produce vehicles from the brands Buick, Chevrolet and Cadillac. The company's board of directors found that the non -liquidity of the stress that is not necessary to liquidity "in view of the finalization of a new business forecast and certain restructuring measures" as part of the joint venture.
effects on the annual financial statements
Most of these burdens are recorded in the company's business figures for the fourth quarter and reduce net income, but not the adjusted results, said a company spokesman. CEO Mary Barra redesigned the GM operations in China after the former profit engine recorded losses last year. In October, Barra explained to the investors that they could expect improvements by the end of the year, with a “significant decline in dealership stock and moderate improvements in sales and market share”.
financial losses and competitive pressure
In the first three quarters of this year,GM had a loss of around $ 350 million in the region. In March, Reuters reported that Saic wanted to reduce thousands of jobs, including in his joint venture with GM. Barra had previously warned that the Chinese market would become unsustainable for many companies. "It is currently a difficult market. And frankly, it is not sustainable, because the number of companies that lose money there cannot be continued unlimited," says Barra in July.
market challenges by local competitors
The strong competition from domestic manufacturers and a price war already have visible effects. Sales at Saic-GM broke up 59 % to 370,989 units in the first eleven months of this year, while the local champion in the area of new energy vehicles, BYD, sold more than ten times as many vehicles in the same period. The GM joint venture reached its peak in 2018 with an annual sale of 2 million cars.
strategic adjustments of competitors
Volkswagen, who lost the title of the best -selling brand in China to BYD in 2022, intensified his efforts to deepen relationships with Chinese partners such as Xpeng Motor and Saic in the field of electromobility in order to combat the decline in its sales figures in its largest market. The German automobile manufacturer and SAIC recently agreed to extend their joint venture contract by another decade by 2040
global trends in the automotive industry
The Japanese automobile manufacturer Nissan Motor also reduces 9,000 jobs and significantly reduces its production capacity due to falling sales in China and the USA. In Detroit, GMS Stadt-competitor Ford Motor transforms its presence in China to position itself as an export center for vehicles. However, some analysts point out that Detroit carmaker should minimize their losses and leave the world's largest automotive market.