Key Points
- General Motors anticipates over $5 billion in noncash charges for restructuring its China joint venture with SAIC Motor.
- Costs include $2.7 billion for plant closures and portfolio optimization.
- GM’s equity income from Chinese operations has declined 78.5% since its 2014 peak, and its market share in China has dropped to 8.6% in 2023.
- The company reported $347 million in equity income losses from its Chinese operations this year.
General Motors (GM) announced it expects over $5 billion in noncash charges and write-downs related to restructuring its joint venture operations in China with SAIC Motor Corp. According to a federal filing, the automaker anticipates a write-down of between $2.6 billion and $2.9 billion to account for the reduced value of its Chinese operations. An additional $2.7 billion will address restructuring costs, including plant closures and adjustments to its product portfolio.
While General Motors had previously disclosed plans to overhaul its China operations, the company did not provide further details on specific closures or changes. In an emailed statement, GM emphasized its commitment to cost efficiency and sustainable profitability. “We are close to finalizing our restructuring plan with our partner and expect our results in China in 2025 to show year-over-year improvement,” the company said.
The restructuring costs, predominantly noncash special item charges, are expected to impact GM’s net income but not its adjusted earnings before interest and taxes—a key performance metric tracked by Wall Street. GM also noted that the joint venture could undergo a restructuring process without requiring new cash investments from the Detroit automaker.
Once a significant profit engine, GM’s operations in China have become a liability in recent years, driven by intensified competition from government-backed domestic automakers and a generational shift in consumer preferences toward electric vehicles. Equity income from GM’s Chinese ventures peaked at over $2 billion in 2014 and 2015 but has since plunged, declining by 78.5% from its peak. GM’s market share in China has similarly eroded, dropping from 15% in 2015 to 8.6% in 2023, marking its lowest point since 2003.
U.S.-based brands like Buick and Chevrolet have faced sharper sales declines than General Motors’s joint venture operations, which accounted for 60% of its 2.1 million vehicles sold in China last year. Still, GM’s Chinese operations have reported consecutive quarterly equity income losses this year, totaling $347 million. This includes a $137 million loss in the third quarter alone.
