GM To Record About $5 Bln In Charges In Q4 Related To China JV Restructuring

General Motors

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(RTTNews) - General Motors Co. (GM) revealed in a Form 8-K filing with the Securities and Exchange Commission on Wednesday that it expects to record charges of around $5 billion in the fourth quarter of fiscal 2024 related to the restructuring of its China joint venture with SAIC Motor Corp., Ltd.

General Motors owns an equity interest in SAIC General Motors Corp. Ltd. or SGM, a 50-50 joint venture with SAIC Motor Corp., Ltd. and an equity interest in SAIC-GMAC Automotive Finance Co. Ltd.

SGM conducts automotive operations in China through various other joint ventures with GM. On December 2, 2024, the Audit Committee of GM's Board of Directors concluded a material impairment of GM's interest in SGM was required.

The committee determined that a material loss in value of GM's investments in certain of the China JVs is other than temporary in light of the finalization of a new business forecast and certain restructuring actions that SGM is finalizing. The actions are expected to be taken to address market challenges and competitive conditions.

The Company is in the process of assessing the impact of SGM's planned restructuring actions and recent efforts to stabilize market share and focus on profitability, and expects to record an other than temporary impairment of GM's equity interest in the China JVs in the range of $2.6 billion to $2.9 billion in the fourth quarter.

It will also incur additional equity losses of approximately $2.7 billion resulting from the implementation of SGM's restructuring plan, which include impairment charges to be recognized by the China JVs related to plant closures and portfolio optimization.

The charges are expected to be non-cash in nature and treated as special for EBIT-adjusted purposes.