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General Motors Posts Massive $100 Million Loss In Chinese Market, GM CEO Mary Barra Undeterred

by | April 25, 2024

General Motors faces big challenges in China, but Mary Barra says GM will stay the course despite the risks that the company faces due to the recent growth of Chinese automakers. 

GM CEO Barra at IR day 2022 REL

General Motors posted a massive first-quarter loss in the Chinese market

The first quarter loss of $100 million by its Chinese joint ventures is raising questions about the fate of General Motors operations as the tensions between the U.S. and China around trade and politics grow. 

The loss in China during the first quarter was the only serious blemish on otherwise strong results in which GM saw its net income increase by 24.6% to $2.9 billion on record revenue from the company’s North American Operations. GM Chairman Mary Barra insisted during a conference call with analysts the losses in China in the first quarter were a temporary blip. 

Losses come as GM prepares EV expansion

2024 Chevrolet Blazer EV platform

The 85-kWh Ultium battery pack used in both the Honda Prologue and Chevrolet Blazer EV.

GM and its Chinese partners were preparing to launch a new fleet of battery electric and plug-in hybrids to recapture the ground it has lost in China where its sales dropped 18% in the first quarter In recent years, the rapid development of China’s home-grown automotive industry, and its emphasis on electric vehicles, has put tremendous pressure on Western carmakers, like GM, with a major presence in China. Ford, with a smaller footprint, faces the same challenges. 

However, John Murphy, the lead automotive analyst for Bank of America, asked Barra this week if the time had come for GM to consider, selling off its Chinese assets. “I just wanted to ask one strategic question on China. At this point, it’s really not a moneymaker for you. And there’s a lot of, obviously, noise on a geopolitical basis and sort of our relationship or the US relationship with China. I’m curious, is it time to really start thinking about strategic alternatives over there to potentially closing or selling the business? How do you kind of think about that in the context of sort of the broader portfolio over the next few years?” Murphy asked. 

GM CEO Mary Barra still committed to Chinese market

Cadillac Optiq China MIIT front pic

GM sees room in the Chinese premium vehicle market with models like the Cadillac Optiq expected to shore up sales in the country

Barra dismissed the idea of leaving China, which has been a significant element of GM’s business and its internal management culture for more than thirty years. 

“We’re committed to China,” Barra said. 

 “We believe that it’s a market that, over the medium term, will have substantial growth. We’re continuing to draw on not only our global solutions, but in some cases, local solutions as we advance our electrification strategy. Right now, NEVs account for about 30% of GM’s total China deliveries. And we’re going to build on that through this year because we have an intense NEV launch cadence. we have several PHEVs we’ll be launching and moving with full EVs as well,” Barra added.  To counter the growing capability of the Chinese automakers, Barra also said GM established what she called the “Durant Guild,” which will allow GM to focus on some niche segments in China that are premium and more lifestyle-oriented. 

“For instance, the Tahoe and the Yukon will be available for pre-order later this year,” Barra added. “We still think there’s a role in a place for GM to play with luxury premium,” she said. 

Questions about the future of GM’s Chinese operations come against a backdrop of rising tensions between China and the U.S., which are exacerbated by trade issues.  As the 2024 Presidential contest heats up, both President Joe Biden and his Republican challenger, Donald Trump, have been taking a hard line on trade with China. The Biden administration is moving to block imports of Chinese-made steel and aluminum, while Trump has called for 100% percent tariffs on Chinese goods. 

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Shifting political climate emerges as potential wildcard

Biden at GM Factory ZERO Grand Opening

GM’s woes in China come as the U.S. prepares for the 2024 election with Biden recently signing a bill that bans TikTok.

Biden also is preparing to sign legislation that would require Chinese entrepreneurs divest their ownership of the social media platform known as TikTok, which is bound to further exacerbate the trade tensions. 

Meanwhile, China has become the leading exporter of finished vehicles, surpassing Germany, Japan, and the U.S. 

Most of the Chinese exports are vehicles with internal combustion engines headed for markets in South America, South and Southeast Asia, and Africa. But exports of Chinese-made EVs have triggered calls for limits in the European Union and outright bans in the United States. 

The interest of Chinese policymakers in electric vehicles goes back almost two decades. The Chinese government concluded years ago that the best way to build up China’s automotive industry, which they saw as critical to economic growth, was with electric vehicles.  They have carefully nurtured the development of EVs with subsidies for years, making China the world’s largest market for electric cars, trucks, and buses. 



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