General Motors (GM) plans to restructure its operations in China to regain profitability. The legacy automaker is laying off employees in China working in market-related departments, like research and development.
In the first half of 2024, GM’s business in China resulted in a $210 million loss. The legacy automaker cut production in the first quarter, hoping it would lead to profitably.
However, in the second quarter, GM reported a loss of $104 million in China. General Motors sales in China dropped by 29% to 373,000 vehicles, a far cry from its 2017 peak of 4 million units.
People familiar with General Motors’ operations in China told Bloomberg that the company plans to meet with its Chinese partner, SAIC, to discuss future plans for profitability.
“We’ve got to remain competitive and that means that we’ve got to take a look at the business with our partner to ensure that we can restore it to profitability and that we can restore it to self-sustaining cash flow going forward. China can be a good asset for us and remains a good asset for us,” said GM’s Chief Financial Officer Paul Jacobson.
GM has two partnerships with Chinese automakers. Its SAIC-GM partnership locally makes American brand vehicles from Buick, Cadillac, and Chevrolet. General Motors also has a SAIC-GM-Wuling Automobile Co. Ltd partnership, which makes small, affordable electric vehicles that are performing better in the local Chinese car market.
In its restructuring plans for China, GM will shift to producing affordable electric vehicles through its SAIC-Wuling Motors partnership. Through its SAIC-GM partnership, the automaker seeks to make more upscale models and import premium vehicles.
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