- General Motors expects to take a hit of more than $5 billion on its struggling China business.
- The Detroit automaker said it would write down the value of its Chinese operations by as much as $2.9 billion.
- GM and other foreign automakers have been hit hard by the rise of Chinese rivals such as BYD.
General Motors is set to take a hit of more than $5 billion on its operations in China amid an onslaught of competition from local rivals.
The Detroit automaker said on Wednesday it would write down the value of its joint venture with SAIC Motors by as much as $2.9 billion and incur a further $2.7 billion in charges as it looks to restructure the China business.
The restructuring costs would include charges for plant closures and portfolio optimization, the majority of which the automaker expects to record before the end of the year.
GM’s Chinese operations lost $347 million in the first nine months of the year.
Shares fell 1.3% in premarket trading, but the stock is up almost 50% this year.
The announcement comes as foreign automakers face rising pressure in China’s brutally competitive auto market from local rivals. Sales for the likes of BYD are booming due to their affordable EV and hybrid options.
Conversely, European manufacturers such as BMW and Mercedes-Benz have reported slumping sales in recent months.
Japanese automakers like Toyota and Nissan are also struggling to maintain market share in the world’s largest auto market, with analysts previously telling Business Insider they were suffering due to an underwhelming lineup of EVs.
GM has tried to adjust its strategy in China as a result of the growing demand for EVs and hybrids.
Sales in China rose 14% in the third quarter of 2023, its best result since 2022, with CEO Mary Barra praising the success of Buick’s GL8 plug-in hybrid luxury minivan.
Barra said in October that the number of companies selling EVs in China was driving an unsustainable price war.
GM did not immediately respond to a request for comment from BI.
