General Motors Anticipates $5 Billion in Non-Cash Charges

Investing.com — General Motors (NYSE:GM) expects to incur over $5 billion in non-cash charges and writedowns due to restructuring its joint venture operations with SAIC Motor Corp. in China, as per a federal filing on Wednesday.

The automaker plans to reduce the value of its joint-venture assets in China by between $2.6 billion and $2.9 billion. It also estimates $2.7 billion in restructuring costs related to measures like plant closures and portfolio optimization.

GM shares fell nearly 1% in premarket trading on Wednesday. Although the company had announced plans for an overhaul of its China operations, it did not provide specific details on the plant closures.

GM reiterated its commitment to operational efficiency and cost management, stating its goal is to improve performance in China. In the announcement, GM noted:
> “As we have consistently said, we are focused on capital efficiency and cost discipline… We expect our results in China in 2025 to show year-over-year improvement.”

The company is optimistic about restructuring the joint venture without extra cash investments from GM. Most of the $2.7 billion in restructuring costs will be reported as non-cash charges in Q4, affecting net income but not adjusted earnings before interest and taxes, which is closely monitored by investors.

Once a vital profit center, GM’s operations in China have faced challenges in recent years due to increased competition from state-supported domestic automakers and shifting consumer preferences toward electric vehicles.

In its peak years of 2014 and 2015, GM’s equity income from its Chinese ventures exceeded $2 billion. However, its market share in China has declined from approximately 15% in 2015 to 8.6% last year, the lowest since 2003. Since 2014, equity income from these operations has plummeted by 78.5%.

This year, GM reported three consecutive quarterly losses in equity income from its Chinese operations, totaling $347 million, including a $137 million loss in Q3.