General Motors (GM) is facing significant challenges in China, once a critical growth market for the American automaker, Bloomberg reports.
The company announced a restructuring plan this week, including over $5 billion in asset write-downs and the closure of factories, as it attempts to navigate a rapidly changing landscape in the world’s largest automotive market.
For years, GM’s brands like Buick and Chevrolet were among the most popular foreign options in China. However, the company’s profits and market share have dwindled as domestic Chinese automakers, supported by government subsidies and favorable policies, have gained ground. The automaker’s market share has fallen from nearly 15% a decade ago to just 6.8% by September, with losses reaching $347 million this year alone.
The restructuring plan comes after GM’s repeated attempts to revitalize its operations in the country, including a meeting led by GM CEO Mary Barra in October to discuss the future of the company’s joint venture with Shanghai’s SAIC Motor Corp. Once a cornerstone of GM’s strategy, the partnership now faces mounting financial pressure, with plans to scale back operations, including the possible closure of plants and job cuts.
GM has struggled to compete with Chinese carmakers, particularly in the electric vehicle (EV) market. In recent years, China has aggressively pushed for new-energy vehicles (NEVs), providing subsidies and incentives that have boosted local manufacturers. Chinese EV companies, like BYD, have advanced rapidly in terms of technology, design, and affordability, outpacing global players like GM in the competitive market.
While GM has made strides to adapt, including a focus on more expensive EV models and imported SUVs, it is still grappling with the cost advantage of Chinese manufacturers. The government’s subsidies have allowed domestic automakers to produce vehicles at prices that foreign companies, including GM, struggle to match. GM’s challenges in China are compounded by a broader trend of declining sales in the region, with the automaker on track for a seventh consecutive year of losses.
The company’s attempts to adapt to the evolving market have not been enough to reverse its decline. Barra acknowledged earlier this year that GM’s efforts, including slowing production to reduce excess inventory, had not yielded the desired results. As GM refines its strategy in China, it is likely to scale down its presence in the middle market, where competition is fierce, and focus on high-end imports and partnerships that may offer more lucrative prospects.
Despite these challenges, GM insists that it is not abandoning China. The company has highlighted its partnership with Wuling Motors, a Chinese manufacturer where GM holds a minority stake, as a potential avenue for growth. Wuling’s small, affordable electric cars have gained traction in China, with sales rising 11% in the third quarter.
