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Photo = Yonhap news |
[Alpha Biz= Reporter Kim Sangjin] General Motors (GM) is undergoing a major restructuring of its operations in China, facing massive losses exceeding $5 billion (approximately 7.1 trillion KRW) as it struggles to compete with government-supported Chinese electric vehicle (EV) companies.
GM had previously established a 50-50 joint venture with Shanghai Automotive Group (SAIC) called SAIC-GM, which was headquartered in Shanghai. This venture produced and sold vehicles under brands like Cadillac and Buick. Founded in 1997, the joint venture initially saw steady growth and significant profits. However, it has gradually lost market share to Chinese manufacturers who heavily invested in EV production.
According to a report by the New York Times (NYT) on December 4, GM disclosed in filings with the Securities and Exchange Commission that it would report a loss of $2.6 to $2.9 billion in the fourth quarter due to the decline in the value of its investment in the joint venture. An additional $2.7 billion in costs will also be reported in the fourth quarter, reflecting GM’s share of the restructuring costs for the joint venture. In total, GM is expected to incur losses exceeding $5 billion from its SAIC-GM venture in the fourth quarter alone.
From January to September this year, GM’s joint venture sales in China dropped by nearly 20%, with its market share declining from 8.6% last year to 6.8% this year, down from over 15% in 2015.
The NYT reported that GM is not the only foreign automaker struggling in China’s massive car market. Companies from Europe, Japan, and South Korea are also facing challenges, as Chinese manufacturers like BYD and Geely release new models and lower prices. Ford, for instance, spent $881 million restructuring its Chinese operations this year. Volkswagen’s vehicle sales in China have also fallen by more than 10%, and the company is now considering shutting down factories in the country.
알파경제 Kim SangJin (letyou@alphabiz.co.kr)
