(Finance) – General Motorsan American automotive giant, will register charges totaling over $5 billion related to the joint venture in China. We read this in an SEC filing, where it is explained that the charges are non-monetary in nature and treated as special for adjusted EBIT purposes.
GM holds an equity stake in SAIC General Motors Corporation (SGM)a 50-50 joint venture with SAIC Motor (SAIC) and an equity stake in SAIC-GMAC Automotive Finance Company (SAIC-GMAC). SGM operates automotive operations in China through various other joint ventures with GM (along with SGM and SAIC-GMAC, the Chinese JVs).
On December 2, 2024, GM concluded that a material deterioration of the stake in SGM was necessary based on the determination that a material loss in value of investments in certain of the Chinese JVs is far from temporary in light of the finalization of a new corporate forecast and some restructuring actions that SGM is finalizing and which are expected to be undertaken to face market challenges and competitive conditions.
GM is evaluating the impact of SGM’s planned restructuring actions and recent efforts to stabilize market share and focus on profitability and expects to (i) record a devaluation other than temporary equity participation in Chinese JVs in the range of 2.6-2.9 billion of dollars in the three months to 31 December 2024 and (ii) recognize further capital losses of approximately 2.7 billion of dollars resulting from the implementation of the restructuring plan of SGM, which include impairment charges to be paid to Chinese JVs related to plant closures and portfolio optimization, the majority of which will be recorded in the three months to 31 December 2024.