Retreat From World’s Largest Auto Market Has Begun: CNN

It wasn’t long ago that China was the largest and most profitable market for General Motors (GM).

Chinese automakers have inundated their domestic market with precisely the type of desirable electric vehicles (EVs) that appeal to local buyers and that American automakers once underestimated. I Photo: BYD

While the company was losing money in North America and Europe, teetering on the brink of bankruptcy and requiring a bailout, sales and profits from China kept it afloat, Chris Isidore reported for CNN.

Now, the situation is reversed. GM is achieving record profits in its home market but is losing so much money in China that questions are arising about its future there.

Meanwhile, Chinese automakers have inundated their domestic market with precisely the type of desirable electric vehicles (EVs) that appeal to local buyers and that American automakers once underestimated.

GM’s sales in China have dropped 19% in the first nine months of the year, and it has reported a $347 million loss from its Chinese joint ventures during the same period.

Earlier this month, GM revealed that its net income would be reduced by over $5 billion due to its struggles in China. About half of this amount reflects the costs of restructuring—and likely downsizing—its operations there.

The other half represents a reevaluation of the worth of its Chinese assets, no longer justified by the current economic conditions.

“You can look back 15, 20 years to when GM’s China operations were its lifeline. It certainly isn’t now. It’s a money pit,” said Jeff Schuster, global vice president of automotive research at GlobalData.

“Every international brand is struggling in China.”