U.S. business media is reporting today that General Motors is taking a massive writedown related to its partnership with a Chinese state-owned automotive company. The Wall Street Journal reports:
General Motors said it expects to incur more than $5 billion in impairment charges and write-downs in the fourth quarter because of weakness in its China business.
The automaker on Wednesday said it wrote down the value of its Chinese partnership with state-owned SAIC Motor after finding a drop in the value of that partnership wasn’t temporary, according to a securities filing.
GM, once a dominant player in China, has been trying to reinvigorate its faltering business in the world’s largest car market with an influx of new models over the past two years.
But the automaker’s market share in the country has shriveled and, after years of consistent profits in China, GM swung to a loss there in the first nine months of this year.
GM Chief Executive Mary Barra (pictured above) said in October that the company would take actions in the current quarter to make the business sustainable and profitable.
At last year’s annual meeting for GM, NLPC presented a “Communist China Risk Audit” shareholder proposal, which specifically cited SAIC as a going concern as part of the need to improve transparency about the company’s risks there. The proposal stated:
GM manufacturers most of its vehicles for the Chinese market within the communist nation, and equally owns “Shanghai GM” with Chinese state-owned SAIC Motor Corp, among other partnerships. The company relies on raw materials, supplies, finished products, labor and/or services from Chinese-controlled entities – and depends on access to its consumer market. GM’s ambitious electric vehicle production goals mean many badly-needed metals come through Chinese-owned mines globally.
The Journal also reported:
GM said it would take an impairment charge of up to $2.9 billion and expects additional equity losses of about $2.7 billion stemming from SAIC General Motors implementing this restructuring plan…Barra has said the company will stick it out in China…
Under Barra, GM has pulled out of many overseas markets, including Europe, India, Australia and parts of Southeast Asia. Retreating from China would further shrink the company’s global presence and leave it more heavily reliant on its home market of North America, its main profit source.
So what has Mary Barra accomplished at GM since she assumed control as Chair and CEO ten years ago? She shrank the global pie where the company could compete, and now its China business is in a shambles, without sufficiently disclosing the related risks to shareholders. Nevermind our proposal — did GM follow its obligations under U.S. law about such disclosures? Expect lawsuits.
And now, according to the Journal, GM’s last viable “profit source” is North America, where Barra has committed vast resources and goals towards a future entirely consisting of money-losing electric vehicles.
Why does she still have a job?
