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General Motors (GM) is set to take a hit of more than $5 billion to fix up its joint venture business in China, the automaker said Wednesday.
GM expects to write down the value of its venture with SAIC Motor by between $2.6 billion and $2.9 billion, it disclosed in a regulatory filing. The company also expects to take another $2.7 billion hit to restructure the business, which will include “plant closures and portfolio optimization,” most of which will occur this quarter.
The company said it was taking action after reviewing the business based on a new business forecast, and its restructuring will focus on addressing market challenges and “competitive conditions.”
Between 2010 and 2013, China was GM’s top sales market, but the automaker has struggled to boost sales there in recent years. Its market share plummeted to 8.6% in 2023, down from a peak of almost 15% in 2015. GM and its joint ventures delivered more than 426,000 vehicles in China last quarter, down from more than 541,000 sold a year earlier.
“We believe that we can turn around the losses,” GM CEO Mary Barra told investors during the automaker’s third-quarter earnings call in October, calling the environment in China “very challenging.”
“We do believe there’s a place we can participate in a very different manner, but do that profitably, and that’s what we’re 100% focused on getting to as quickly as possible,” she added.
GM stock fell about 1% in pre-market trading Wednesday, taking a small dent in the automaker’s 47% year-to-date growth.
The announcement comes a day after GM said it had reached a non-binding agreement to sell its stake in a Lansing, Michigan, battery cell plant to its joint venture partner, LG Energy Solution. The transaction is expected to close during the first quarter of 2025.
The automaker said it expects to recoup its investment in the facility, a 2.8 million-square-foot plant that is almost completed. It will be the third plant made through the companies’ Ultium Cells Venture. GM said it will still use its plants in Warren, Ohio, and Spring Hill, Tennessee, to create battery cells that power its electric vehicles, including the Chevrolet Blazer EV and Cadillac Lyriq.