GM to take a $5 Billion hit on joint venture in China

What you need to know

• General Motors stated in a recent regulatory filing that the joint venture between SAIC Motor Corporation and General Motors in China will cost it more than five billion dollars in write-downs, non-cash charges, etc.
• The automaker expects to incur impairment losses of between $2.6 and $2.9 billion this year, as well as equity losses of up to $2.7 billion.
• GM China has been losing money for the last three years, with $137 million lost in the third-quarter.

General Motors’ (GM) stock fell Wednesday, after the automaker announced that it will take non-cash costs and writedowns of more than $5 billion to restructure a struggling joint venture with SAIC Motor Corporation. 

GM stated in a filing to the Securities and Exchange Commission that the impairment costs for the JV 50/50 are expected to be between $2.6 and $2.9 billion in the current quarter. It expects an additional $2.7 billion of equity losses due to the implementation plan. The majority of these expenses will be recorded in the current quarter. They are primarily related to plant closings and portfolio optimization.

GM explained that its board's audit committee concluded that "a material loss in value of our investments in certain of the China JVs is other than temporary" as the JV took steps "to address market challenges and competitive conditions."

GM reported $137M in Q3 equity losses in China

The GM SAIC partnership began in 1997. But sales have declined recently. GM China has suffered three consecutive quarterly equity losses, with a loss of $137 million in the last quarter.

In an emailed response to Investopedia's request for comment, a GM spokesperson said, "We expect our results in China in 2025 to show year-over-year improvement as a result of the actions our SGM joint venture is taking to make the business sustainable and profitable."

General Motors’ shares are down 1% but up nearly 50% on the whole year.

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