DETROIT (AP) 鈥� The poor performance of General Motors' Chinese joint ventures is forcing the company to write down assets and take a restructuring charge totaling more than $5 billion in the fourth quarter of this year.
The Detroit automaker said in a regulatory filing Wednesday that it will cut the value of its equity stake in the ventures by $2.6 billion to $2.9 billion when it reports its results early next year. In addition, GM will take $2.7 billion worth of restructuring charges, most of it during the fourth quarter.
The noncash charges will reduce the company's net income, but they will not affect adjusted pretax earnings, GM said in the filing with the U.S. Securities and Exchange Commission.
GM for years has owned 50% of its joint venture with SAIC General Motors Corp. and has other joint ventures, including a finance arm. The ventures used to be a reliable source of equity income for the company, but have swung to losses in the past year.
The ventures lost $347 million from January through September, compared with a profit of $353 million in the same period of 2023. Still, GM expects to post a
China has become an increasingly difficult market for foreign automakers, and other domestic companies raising their quality and reducing costs. The country also has subsidized domestic automakers.
The main joint venture with SAIC, called SGM, is finishing restructuring actions that GM expects will 鈥渁ddress market challenges and competitive conditions,鈥� GM said in the filing.
On GM鈥檚 third-quarter earnings conference call, Chief Financial Officer Paul Jacobson said restructuring in China had not yet started, but sales were up and inventory was down.
CEO Mary Barra said China is a difficult environment because some domestic brands 鈥渄on鈥檛 seem to prioritize profitability, they鈥檙e definitely prioritizing production.鈥� She said GM can make money there in a different way, focusing on a new pickup truck and importing premium vehicles.
Shares of General Motors Co. slid 3% before the opening bell Wednesday.
The Associated Press
