GM anticipates a significant impact of over $5 billion from the restructuring of its operations in China, which may involve shutting down plants.

• The restructuring of General Motors' joint venture operations with SAIC Motor Corp. in China is expected to result in charges and writedowns totaling more than $5 billion.
• According to the filing, the anticipated restructuring charges for the "SGM" joint venture include plant closures and portfolio optimization.
• During the fourth quarter, most of the costs are expected to be recognized as non-cash, special item charges, according to GM.

The Detroit automaker anticipates that the restructuring of its joint venture operations with in China will result in non-cash charges and writedowns totaling more than $5 billion, as disclosed in a federal filing on Wednesday morning.

According to the filing, GM anticipates writing down the value of its joint-venture operations in China between $2.6 billion and $2.9 billion. Additionally, the company expects to incur $2.7 billion in charges for restructuring its business, including "plant closures and portfolio optimization."

The GM company, which had previously announced plans to restructure its operations in China, did not provide any further information regarding the anticipated shutdowns.

Our focus on capital efficiency and cost discipline has led us to work with SGM to turn around our business in China, with the goal of being sustainable and profitable in the market. We are near completion of our restructuring plan with our partner and anticipate year-over-year improvement in our results in China in 2025, as stated in an emailed statement by GM.

The American automaker has the ability to restructure the joint venture without new cash investments, according to GM.

The restructuring costs are expected to be recognized as non-cash, special item charges during the fourth quarter, which will affect the automaker's net income but not its adjusted earnings before interest and taxes, a key metric monitored by Wall Street.

In the past decade, GM's operations in China have shifted from being a source of profit to a liability due to increasing competition from government-backed domestic automakers fueled by nationalism, as well as a generational shift in consumer perceptions of the automotive industry and electric vehicles.

In 2014 and 2015, GM's Chinese operations and joint ventures generated equity income of over $2 billion.

In 2015, GM's market share in China was approximately 15%, but it has since decreased to 8.6% in 2019, marking the first time it has fallen below 9% since 2003. Additionally, GM's equity income from operations has decreased by 78.5% since peaking in 2014, according to regulatory filings.

In China, GM's U.S.-based brands, including Buick and Chevrolet, experienced a decline in sales, while its joint venture sales with SAIC Motor, Wuling Motors, and others accounted for approximately 60% of the 2.1 million vehicles sold last year.

Since 2009, GM has only experienced quarterly losses in China twice: a $167 million shortfall in the first quarter of 2020 due to the coronavirus pandemic and an $87 million loss in the second quarter of 2022.

This year, the Detroit automaker has reported three consecutive quarterly losses in equity income for its Chinese operations, totaling $347 million, including a loss of $137 million during the third quarter.