‘Race to the bottom’: General Motors grapples with huge losses, uncertain future in China
Carmaker is restructuring its operations as it struggles to compete with domestic brands and shift to EVs
General Motors CEO Mary Barra has said that China’s crowded market is a “race to the bottom”. For GM, it’s a contest that’s left the carmaker saddled with losses and rethinking its options.
The US carmaker revealed on Wednesday that it would take charges and asset writedowns of more than US$5 billion for its investment in a joint venture with Shanghai’s SAIC Motor and to restructure operations in China, including closing factories.
In a country that not long ago counted Buick and Chevrolet as two of the most popular foreign brands, GM’s profits and market share have tumbled, so much that, like other multinationals, the company’s long-term presence in China is anything but certain.
Barra led a meeting in late October to try to reenergise the SAIC venture, a once-crucial partnership that dates back to the 1990s. The idea was to restructure because GM could no longer afford to bleed hundreds of millions of dollars a year. With today’s massive revaluation, Barra is signalling that the carmaker is dialling back its ambitions.
Once a linchpin of GM’s global strategy, the company’s China business is in free fall. The carmaker has not given many details of its plans but the partners are looking at difficult options that will shrink its presence. The joint venture will likely cull workers and close plants, according to people familiar with the matter. GM is looking at axing specific models, turning brands like Buick – once the preferred car of the Chinese emperor in the 1920s – from a household name into a minor player.
