General Motors is taking a $5 billion-plus hit on its operations in China

General Motors has a joint venture in China with SAIC Motors.

General Motors is set to take a hit of more than $5 billion on its operations in China amid an onslaught of competition from local rivals.

The Detroit automaker said on Wednesday that it would write down the value of its joint venture with SAIC Motor by as much as $2.9 billion and incur a further $2.7 billion in charges as it looks to restructure the China business.

The restructuring costs would include charges for plant closures and portfolio optimization, the majority of which the automaker expects to record before the end of the year.

GM’s Chinese operations lost $347 million in the first nine months of the year.

The company said in a statement: “We expect our results in China in 2025 to show year-over-year improvement as a result of the actions our SGM joint venture is taking to make the business sustainable and profitable.”

Shares fell 1.3% in premarket trading, but the stock is up almost 50% this year.

The announcement has come as foreign automakers face rising pressure in China’s brutally competitive auto market from local rivals. Sales for the likes of BYD are booming because of their affordable EV and hybrid options.

Conversely, European manufacturers such as BMW and Mercedes-Benz have reported slumping sales in recent months.

Japanese automakers such as Toyota and Nissan are also struggling to maintain market share in the world’s largest auto market, with analysts previously telling B-17 they were suffering because of an underwhelming lineup of EVs.

GM has tried to adjust its strategy in China as a result of the growing demand for EVs and hybrids.

Sales in China rose 14% in the third quarter of 2023, its best result since 2022, with CEO Mary Barra praising the success of Buick’s GL8 plug-in hybrid luxury minivan.

Barra said in October that the number of companies selling EVs in China was driving an unsustainable price war.