Detroit, U.S.

U.S. automakers are struggling in the world's largest car market and General motors (GM) has announced another plan to write off over USD 5 billion in noncashing costs in connection with its ailing Chinese operations. By shareholder, charges disclosed Wednesday include USD 2.6 billion to USD 2.9 billion for restructuring costs and USD 2.7 billion for the loss from the reduced value of it's joint venture with SAIC Motors.  

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Once GM's most profitable division, the company's China arm has turned into a loss making business as it battles with a glut of domestic automakers in what is the world's largest mobile market. In electric vehicles, China has surpassed traditional Western carmakers with plenty of help from government subsidies and fast learning.  

Plant closures and adjustments to GM's vehicle portfolio are expected as the restructuring occurs, but the names of which plants will be affected or exactly what changes will be made at the company wasn't released. A spokesperson said most of these charges would cut into GM’s fourth quarter earnings, the company’s net income, with no impact on adjusted results.  

Buick, Chevrolet and Cadillac are among the vehicles produced by GM's joint venture with SAIC Motors, but the partnership has been unable to maintain market share. Sales at SAIC-GM in the first 11 months of 2023 were down 59 percent at 370,989 units, a dramatic decline compared to local EV heavyweight BYD, whose sales were over 3.9 million in the same period.  

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It is a tough market in China, said Mary Barra, chief executive of General Motors, who acknowledged the challenges this year when she warned earlier this year that the market has become 'untenable' for many foreign automakers. For the first three quarters of 2023, GM lost USD 350 million in that region. By the end of the year, Barra says it'll have cut dealer inventories dramatically and raised sales slightly.  

Although challenges in China mirror wider industry issues, rivals Ford and Nissan are reassessing their own footprint in the country. The once market leader is now losing to Chinese EV firms BYD and is desperate for partnerships with them to regain lost competitiveness, such as with Xpeng Motors.  

While GM aims to restructure its joint venture without new cash investments, some analysts suggest Detroit automakers may need to consider a complete exit from the Chinese market as local competitors continue to dominate.