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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 full year net profit of $10.4
billion to $11.1 billion.
China has become an increasingly difficult market for foreign
automakers, with BYD 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 “address market
challenges and competitive conditions,” GM said in the filing.
On GM’s 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 “don’t seem to prioritize profitability,
they’re definitely prioritizing production.” 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.
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