General Motors suffers $12bn loss as Chinese market declines
This automotive titan faces a massive financial setback as it fails to fire in the world’s largest car market.
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China has hit the brakes on General Motors.
The parent company to powerhouse brands such as Chevrolet and Cadillac was once a powerhouse in China’s booming car market.
Now it has revealed a shocking $US8billion ($12.4b) hit due to falling demand and profitability.
GM’s sales and market share has been gradually declining as competition in China increases from local automakers.
The loss announced on Wednesday includes $US5 billion in restructuring costs and a $US2.7 billion hit to GM’s joint venture with state-owned SAIC Motor.
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GM chief executive Mary Barra has previously described the domestic car market in China as a “race to the bottom”
The company’s chief financial officer, Paul Jacobson, told the New York Times that the $5bn reflects an effort to make SAIC-GM “profitable on a smaller scale”.
“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,” the company said in a filing to the Securities and Exchange Commission.
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Automotive expert Michael Dunne of Dunne Insights told Yahoo Finance that “GM had a tremendous run in China — two decades of growth, profits, and harmony with their joint venture partner. That era is suddenly over”.
GM’s Chinese arm, SAIC-GM operates as a joint venture producing cars for brands such as Cadillac and Buick.
The venture was once a profit engine and was growing steadily since it formed in 1997.
However, its market share has halved shrunk to 6.8 per cent in the last year.
The joint venture lost $347 million in the first nine months of the year.
China was once a profitable market for GM but the rise of local brands such as BYD and Geely threaten the success of auto giants.
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Chinese brands also benefit from government support, competitive pricing and the support of patriotic consumers.
But the problem facing GM is not unique.
Earlier this week we’ve seen autogiants such as Nissan, Volkswagen and Stellantis face troubles.
Volkswagen was once China’s top selling automaker but has now lost its ground to Chinese EV automakers like BYD.
Ford Motor is another automaker who has spent more than $881 million this year in restructuring its Chinese business.
According to the New York Times, despite the $US8bn loss, GM plans to finalise its restructuring efforts by the end of the year but will likely face continued pressure from domestic competitors.
“We are close to finalising our restructuring plan with our partner, and we expect our results in China in 2025 to show year-over-year improvement,” A GM spokesperson told the New York Times.
Originally published as General Motors suffers $12bn loss as Chinese market declines
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