MW GM signals more trouble for China's auto market with $5 billion-plus in impairment charges and write-downs

By Ciara Linnane and Steve Gelsi

GM's 50-50 joint venture with SAIC Motor Corp. faces 'market challenges and competitive conditions.'

General Motors Co.'s stock slid 2.9% early Wednesday as the auto giant's joint-venture in China booked more than $5 billion in impairment charges and write-downs in the face of competitive price wars in that market.

GM $(GM)$ said the charges reflect restructuring costs and a new business forecast to "address market challenges and competitive conditions."

It's the latest sign of challenges facing auto makers in China, General Motors (GM) said it expects to record an impairment charge of $2.6 billion to $2.9 billion in the fourth quarter on its SAIC Motor Corp Ltd. $(SGM.AU)$ joint venture.

It'll also book equity losses of about $2.7 billion to cover restructuring costs.

Along with its 50-50 joint venture SGM, GM also has an equity interest in SAIC-GMAC Automotive Finance Co. Ltd.

SGM operates in China through other joint ventures with GM.

GM's moves comes after a series of developments in the China auto market which faces price wars.

Chinese electric vehicle maker BYD Co. (CN:002594) requested a 10% reduction in prices from its suppliers, according to a Bloomberg report last week.

Tesla Inc. $(TSLA)$ has been discounting its Model Y electric vehicle in China,

GM shares have also been under pressure in recent days on president-elect Donald Trump's import tariff proposals, including a 25% tariff on products from Mexico and Canada.

GM and Ford Motor Co. $(F)$ make cars in Mexico. Even their American-made cars contain parts made there as well.

GM's stock has gained 49% in the year to date, while the S&P 500 has gained 27%.

Also read: Why GM, Ford stocks are falling after Trump's tariff plan for Mexico and Canada

-Ciara Linnane -Steve Gelsi

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December 04, 2024 07:38 ET (12:38 GMT)

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