Due to poor market performance, GM is restructuring its China operations. According to Bloomberg, GM stated in an email announcement, "We are about to finalize a restructuring plan with our partners, and expect our China operations to achieve annual improvement by 2025." On December 4 local time, GM disclosed in a filing with the U.S. Securities and Exchange Commission (SEC) that it plans to incur over $5 billion in expenses and asset impairments during the restructuring of its China operations to regain market share in China. Paul Jacobson, GM's Chief Financial Officer (CFO), stated that this was a "tough decision" but would allow GM to "be profitable on a smaller scale."

In fact, news of GM restructuring its China operations had circulated earlier. In the second quarter of this year, a security filing submitted by GM to the U.S. Securities and Exchange Commission revealed that GM was considering restructuring its China operations. In August, it was reported that due to shrinking market share, GM would lay off employees in relevant departments in the Chinese market. Moreover, GM would meet with its local partner, SAIC Motor, to discuss large-scale structural adjustments to its China operations. In September, news of large-scale layoffs at SAIC-GM emerged. In October, GM CEO Mary Barra stated that actions would be taken in the fourth quarter to make its business sustainable and profitable. It now appears that GM's actions have been proceeding as scheduled and have made substantial progress. GM's statement on the restructuring of its China operations stated that "communication with partner SAIC Motor is closer than ever before" and that "we are taking measures to reduce inventory, produce on demand, protect the pricing system, and reduce fixed costs."

Over the past few years, SAIC-GM's sales have been declining. In 2023, SAIC-GM's annual sales were only 990,000 units, half of its peak sales. In the first 11 months of this year, SAIC-GM's cumulative sales were only 600,000 units. Even if 100,000 units are sold in December, SAIC-GM's sales in 2024 will still decline by 30%. The continuous decline in sales has also impacted GM China's financial performance. Since the beginning of this year, GM has incurred losses for three consecutive quarters in the Chinese market, amounting to a cumulative loss of $347 million (approximately RMB 2.5 billion). In the third quarter, GM's loss amounted to $137 million (approximately RMB 994 million). This indicates that GM's losses in China are expanding.

In a filing with the U.S. Securities and Exchange Commission (SEC), GM stated that it would write down the equity of its joint venture with SAIC Motor by $2.6 to $2.9 billion, reflecting the company's dim outlook for the long-term prospects of its China operations. It is worth mentioning that the SAIC-GM cooperation project will expire in June 2027, and there is currently no news of a renewal. However, not long ago, SAIC Motor and the Volkswagen Group signed a renewal agreement, extending the SAIC Volkswagen project, which was set to expire in 2030, to 2040. This move has sparked speculation about the future existence of SAIC-GM. Some analysts have even called for GM to withdraw completely from the Chinese market. However, GM CEO Barra stated that the company will persist in the Chinese market.

GM's official statement also reads, "Our China operations are a high-quality asset for our present and future. Our communication and collaboration with joint venture partner SAIC Motor are closer than ever before to achieve profitability and sustainable development." "In November, we achieved month-on-month sales growth for the fifth consecutive month. Since the beginning of this year, dealer inventory has been reduced by more than 50%." Such market performance has laid the foundation for GM's "expectation of annual improvement in China operations by 2025." The day after this statement was released, news emerged that GM China had initiated a "competitive layoff" model. Among them, the finance department and product planning department saw a one-third reduction in staff, and the intelligent driving R&D team was "eliminated." Other departments are still in the process of competition, and the final layoff list has yet to be determined.

It is rumored that the Chevrolet brand may be discontinued, and the product line of the Buick brand will also be compressed, focusing on popular models. More importantly, after this adjustment, GM China's intelligent driving R&D will shift from a "US-introduced" model to a "cooperation with Chinese automakers" model to meet consumer demand and reduce costs. GM disclosed in a filing with the U.S. Securities and Exchange Commission (SEC) that it plans to spend $2.7 billion to close factories in China and restructure its operations there. Next, we will see how effective GM's business adjustments are.0

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