Losses in China navigator to $5Bn expense for General Motors as it cuts assets worth

DETROIT — The impoverished act of General Motors’ Chinese joint ventures is forcing the business to write down assets and receive a restructuring expense 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 worth of its stake stake in the ventures by $2.6 billion to $2.9 billion when it reports its results early next year. In addition, GM will receive $2.7 billion worth of restructuring charges, most of it during the fourth quarter.

The noncash charges will reduce the business’s net returns, but they will not affect adjusted pretax returns, GM said in the filing with the U.S. stocks and bonds and swap fee.

GM for years has owned 50% of its joint assignment with SAIC General Motors Corp. and has other joint ventures, including a finance arm. The ventures used to be a reliable source of stake returns for the business, but have swung to losses in the history year.

The ventures lost $347 million from January through September, compared with a returns of $353 million in the same period of 2023. Still, GM expects to post a packed year net returns of $10.4 billion to $11.1 billion.

China has become an increasingly challenging trade for foreign automakers, with BYD and other domestic companies raising their standard and reducing costs. The country also has subsidized domestic automakers.

The main joint assignment with SAIC, called SGM, is finishing restructuring actions that GM expects will “address trade challenges and competitive conditions,” GM said in the filing.

On GM’s third-quarter returns 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 challenging surroundings 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 recent pickup truck and importing additional expense vehicles.

Shares of General Motors Co. slid 3% before the opening bell Wednesday.