China losses force General Motors to take over $5B in charges to restructure and cut asset values
Dec 4, 2024, 4:36 AM | Updated: 10:46 am
FILE - The Renaissance Center is shown near the Detroit-Windsor tunnel plaza in Detroit, Aug. 9, 2021. (AP Photo/Paul Sancya, File)
Credit: ASSOCIATED PRESS
(AP Photo/Paul Sancya, File)
DETROIT (AP) — 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 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.
