DETROIT — General Motors is facing significant challenges with its joint ventures in China, prompting the company to plan for a write-down of assets and a substantial restructuring expense exceeding $5 billion in the upcoming fourth quarter.
In a regulatory announcement made on Wednesday, the automaker disclosed that it intends to lower the valuation of its investments in these ventures by $2.6 billion to $2.9 billion when it publishes its financial statements early next year. Additionally, GM will incur approximately $2.7 billion in restructuring costs, predominantly anticipated during the fourth quarter.
Although these noncash charges will have a negative impact on GM’s net income, the company clarified that they will not influence its adjusted pretax earnings, as outlined in its filing with the U.S. Securities and Exchange Commission.
For many years, GM has held a 50% interest in its joint venture with SAIC General Motors Corp., along with various other partnerships, including in finance. These ventures, which were once a steady source of income for the firm, have recently tumbled into losses over the past year. From January to September, these operations reported a loss of $347 million, a stark contrast to the $353 million profit achieved during the same timeframe in 2023. Nevertheless, GM remains optimistic about its financial prospects, forecasting a net profit for the full year between $10.4 billion and $11.1 billion.
The landscape in China has become increasingly difficult for international automobile manufacturers. Competitors like BYD and other local enterprises have notably improved their product quality while simultaneously lowering their prices. Additionally, domestic automakers have benefited from government subsidies, further complicating the situation for foreign companies like GM.