General Motors Co. executives thought the company would be able to return to profitability in China during Q2.
The automaker took steps to align production with demand, while also reducing its costs and inventory in the world’s largest auto market.
“But it's clear the steps we have taken, while significant, have not been enough,” CEO Mary Barra said during the company’s Q2 earnings call on July 23.
GM reported a $104 million loss in China last quarter, down $182 million year over year, according to its earnings report. Barra said the company is working with joint venture partner SAIC to restructure and return the business to profitability.
“But it's a difficult market right now,” she said. “And frankly, it's unsustainable, because the amount of companies losing money there cannot continue indefinitely. And really, when you get into the type of pricing war that's going on now, it's really a race to the bottom and [it destroys] residuals.”
China was once GM’s largest retail market, however deliveries fell by nearly half over a six-year period, from just over 4.04 million vehicles to 2.1 million units in 2023.
Barra spoke optimistically about GM’s new energy vehicle launches, adding the company is “aggressively” pursuing structural costs reductions to aid in the return to profitability.
Bloomberg reported Monday that the company is laying off staff in China, including in research and development, citing people familiar with the matter.
During the earnings call, Barra declined to elaborate on GM’s discussions with SAIC regarding efforts to right-size the business, but assured investors that China will one day return to growth.
“I think when we look at the strength of the Buick brand and the China brand, there's a path forward in this market that we do believe, over the course of the midterm, is going to resume to growth,” she said.
