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General Motors has taken a $5bn charge against its businesses in China, laying bare the slowdown in what was once the US carmaker’s largest market.
On Wednesday, GM said that there was a “material loss in value of our investments in certain of the China joint ventures . . . in light of the finalisation of a new business forecast and certain restructuring actions”.
The company said that it would write down the value of its interest in its Chinese joint ventures by as much as $2.9bn, and record an additional $2.7bn in restructuring charges.
GM shares were down 3 per cent in pre-market trading on Wednesday, having fallen 2.5 per cent in the previous session.
GM and Germany’s Volkswagen are two of the largest western carmakers operating in China. But like many rivals, both are struggling to maintain their position amid rising competition from local manufacturers.
Problems in China have also recently led to steep falls in quarterly profit for Toyota, Honda and BMW.
GM runs a series of joint ventures in the country alongside SAIC Motor Corp.
Earlier this month, VW also announced that it has sold its plant in Xinjiang following scrutiny over its presence in a region of China where Beijing has been accused of widespread human rights abuse.
In October, GM’s chief executive Mary Barra told investors that the company’s restructuring measures would start to bear fruit by the end of this year.
“In China, you’ll begin to see evidence of a turnaround yet this year, with a significant reduction in dealer inventory and modest improvements in sales and share,” she said.
But analysts say western carmakers are unlikely to regain the profits and market share they once enjoyed in China, forcing many to refocus their efforts on the US, now GM’s biggest market.
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