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General Motors has filed a $5 billion indictment against its China operations, revealing a slowdown in the U.S. carmaker’s former biggest market.
On Wednesday, GM said there had been a “material loss in value of our investments in certain joint ventures in China. . . in light of the finalization of the new business forecast and certain restructuring actions”.
The company said it would write down the value of its stake in its Chinese joint ventures by as much as $2.9 billion and record an additional $2.7 billion in restructuring charges.
GM shares fell 3 percent in premarket trade on Wednesday, after falling 2.5 percent in the previous session.
GM and Germany’s Volkswagen are the two largest Western car manufacturers operating in China. But like many rivals, both are struggling to maintain their position amid increasing competition from local manufacturers.
Problems in China have also recently led to sharp drop in quarterly profit for Toyota, Honda and BMW.
GM is running a number of joint ventures in the country along with SAIC Motor Corp.
Earlier this month, VW also announced it had sold its factory in Xinjiang after scrutiny of its presence in a region of China where Beijing has been accused of widespread human rights abuses.
In October, GM CEO Mary Barra told investors that the company’s restructuring measures would begin to bear fruit by the end of this year.
“In China, you will start to see evidence of a turnaround as early as this year, with significant reductions in retailer inventories and modest improvements in sales and share,” she said.
But analysts say Western automakers are unlikely to regain the profits and market share they once enjoyed in China, forcing many to focus their efforts on the US, now GM’s biggest market.
