Written by Cláudio Afonso | LinkedIn | X
General Motors said on Wednesday that it will record approximately $5.3 billion in charges in the fourth quarter of the year related to its Chinese joint venture with the SAIC Group as it plans a major restructuring process which includes “plant closures and portfolio optimization”.
The impairment charges, totaling $2.6 billion to $2.9 billion, reflect a loss in the value of GM’s investments in the China JVs that the company deems “other than temporary.” An additional $2.7 billion in equity losses will be recognized as part of SGM’s restructuring plan, which includes plant closures and portfolio optimization — according to the SEC filing.
In a new SEC filing, the automaker said its Audit Committee determined that a material impairment of its 50-50 joint venture with SAIC Motor Corp., was required. GM also holds an equity interest in SAIC-GMAC Automotive Finance Company Limited.
The company attributed the impairment to a new business forecast and restructuring actions at SGM aimed at stabilizing market share and focusing on profitability in China, where GM has faced declining sales and stronger competition.
“These charges are non-cash in nature and will be treated as special items for EBIT-adjusted purposes,” GM said in the filing.
As reported earlier this week, General Motors is preparing to sell its stake in the Ultium Cells battery plant, a joint venture with South Korea’s LG Energy Solution, for around $1bn. The plant, first announced in 2020, represents a $2.6 billion investment between GM and LG Energy Solution.
Last month, the Detroit carmaker announced it would lay off nearly 1,000 workers worldwide, most of them in the United States. The company informed employees of its third workforce reduction since August, following layoffs of over 1,000 employees in its software department and approximately 1,700 workers in September at a manufacturing plant in Kansas.
Written by Cláudio Afonso | LinkedIn | X
