Gm, five billion maxi write-down for China operations

General Motors is incurring five billion dollars in charges caused by the crisis and the devaluation of its assets in China, now the world's largest car market. The loss, the company said, will be recognised in the fourth quarter of the year, reflecting the fall in value of its partnership with China's state-owned Saic Motor group. The drop, Gm determined, is not temporary.

On Wall Street, the stock dropped about 1%, but remains up 47% since the beginning of the year.

Of the 5 billion charges announced, 2.9 billion are related to write-downs and another 2.7 billion to restructuring at Saic General Motors. Included, it is understood, are plant closures and portfolio optimisations. However, the company's top management has so far indicated that Gm intends to remain in China and avoid drastic retreats. Ceo Mary Barra under her stewardship has progressively downsized the group's global presence, targeting operations in Europe, India, Australia and Southeast Asia. But China has remained a staple to this day, along with its strategic North American assets, where it still generates most of its profits.

However, China has become a new mole in GM's performance. Its market share has shrunk in recent years, despite repeated efforts to relaunch and promote new models, in the face of the advance of domestic manufacturers and in particular electric vehicles. A sign of this decline, profitability: past profits have been replaced by a loss in the first nine months of 2024.

CEO Mary Barra had already let it be known in recent months that she would be making significant decisions in the current quarter to restore the business. "The operating climate in China continues to be difficult and we have work to do with our partner," she said.