GM Committed To Chinese Market Despite Local Competition
12
Sponsored Links
GM CFO Paul Jacobson has reaffirmed General Motors’ commitment to the Chinese market in the face of increased competition from local Chinese auto brands. General Motors recently posted a $104-million loss in the Chinese market for the second quarter of the 2024 calendar year after executives previously predicted a profit in the region. Going forward, The General aims to make its Chinese operations financially self-sustaining.
Per a report from Reuters, GM CFO Jacobson spoke on the issue on Thursday during an automotive conference organized by J.P. Morgan. “We’re committed to maintaining cash stability there at a point where it’s self-sustaining. That means not needing any capital from outside,” Jacobson said.
Jacobson also indicated that General Motors’ Chinese business could prove to be a valuable asset, but admitted that some restructuring was needed. To that end, The General will work alongside its joint-venture partners in China and plans to cut spending.
“I don’t necessarily accept the notion that we’re struggling to make money there,” Jacobson said.
GM previously raked in profits from its Chinese operations, but has faced increasing competition in the last decade that has affected the company’s bottom line. Chinese automakers like BYD, Chery, and Geely have continued to turn out highly affordable models offering a variety of desirable features. For example, the new 2025 BYD Seagull EV starts at just 69,800 yuan, or $9,727 at current exchange rates, and includes features like a seven-inch floating instrument panel, 10.1-inch central control screen, and 190 miles of range per charge.
A recent study found that the Chinese government spent nearly a quarter of a trillion dollars over the last decade to bolster the Chinese EV industry.
Earlier this year, the Biden administration announced a series of tariff increases on Chinese-made EVs and EV components. As such, it’s unlikely that models like the new BYD Seagull will be sold stateside, but nevertheless, the hugely affordable price tag of these Chinese models should serve as a clarion call for Western automakers, including GM, which aims to make the next-generation Chevy Bolt EV the least-expensive all-electric vehicle in the U.S.
Subscribe to GM Authority for more GM business news, GM electric vehicle news, and around-the-clock GM news coverage.
Sponsored Links
They have no choice but to remain committed to China. They pulled all their eggs out of the other baskets and put them into Chinas basket only recently realizing what a dangerous move they made rather than remaining globally active like Toyota, VW, and Hyundai. Now, they better make China work or suffer significant financial damage. And it doesn’t look like China will be on their side should SAIC decide to split from them. Talk about being caught with your pants down.
GM dominates the entire western hemisphere. Toyota is non existent in South America or Europe, so I don’t get what you mean by Toyota eating their lunch. VW is only dominate in Europe due to trade imbalances. Ford only has a foothold in Europe because they neglected all other markets. GM is competitive in South Korea, and has a springboard from there into other Asian markets if they so choose.
Now china will never be profitable for GM, Ever. The CCP is dangling a carrot in front of GM keeping them around to steel their technology, but will eat them for every last dollar before it’s all said and done. GM needs to cut their losses and leave china NOW! It’s not that they can’t be competitive there, the CCP won’t ever let them.
I would love to believe what you are saying is true and that I am not giving GM enough credit here. But GM went from being the number 1 largest auto manufacturer to what? Number 4?
I will say that GMs stock price ($40) is currently higher than Ford, VW, Honda, Stellantis, Mazda, Nissan, and Fuji Heavy Industries (Subaru).
Hyundai, Kia (which is separately listed from its sister company), and Toyota are all higher with Toyota at $168. So atleast that is a good sign.
Stock price isn’t a great method of wealth judgement. Some companies like holding it high, others sell more shares to make it more accessible.
As far as profits go, GM is higher than Toyota. Total sales bounces from GM to Toyota to Ford depending on the year, though here as of late Ford much less so. Toyota sells more total cars, GM moves more total Iron (Toyota sales are largely due to subcompacts in Africa that make the numbers difference) Toyota has an unfair monopoly in Asia, like VW has a legal advantage in Europe, which is why they do so well in that market. GM is well established in South America due to them being there first. With Brazil’s wealth expansion, they will continue to do well. Asia is on a downward trend generally.
I love it. It’s all about the steel (sic).
The issue of affordability has been a pressing issue for quite some time now. I am convinced that GM can remain in the Chinese market and reach profitability (to some extent they already have if you factor in the Chinese-made Buicks exported to the West), but it’s questionable to continue the venture in light of the current geopolitical climate. I also remember when GM assured us that they were “all in” on EVs. Two years later and they are suddenly open to PHEVs and HEVs. If I were a stockholder, I’d anticipate GM’s eventual sale or relocation of its Chinese division despite their promises to be “all in” this market.
Yet those Chinese made Buicks couldn’t remain competitive over here. Even china now is building plants in Mexico because the Chinese don’t know how to build cars efficiently. Look at the cost of a BYD car. Basically a Malibu yet costs as much as a Mercedes. China can use forced labor to make playing cards. That’s about it. They buy rice from American farmers because we make it cheaper and faster, they buy Japanese turbines and caterpillar engines. They comb their 1.4 billion population for the best athletes, train those athletes from 4 years old, then loose in the Olympics to an Uber driver who runs part time.
China got all the intellectual properties and auto manufacturing know how they needed from gm “joint ventures “. gm no longer needed there or able to compete with government subsidized auto companies.
All the foreign manufacturers operating in CHIna were screwed. Except Toyoda, Hyundia, and VW are also highly subsidized (not nearly to the same extent) by their governments and will not fail. Unfortunately, GM is fading as has been fading since the 1960’s. They’ll probably be bought up or merged with another company because of their pickups and SUVs. And expect the same fate at Ford as we have already seen with Chrysler.
One of the few things Biden has done right is tariff CHIna EVs and he did that before the coup when he was trying to get reelected.
No reason to think GM can prosper in China. They have proven to be unable to fend off competition in the US. Long term prospects very iffy.
Good luck with that Paul. GM’s volume in China is dropping like a stone with no end in sight. In 2016 they sold 3.8 units in China. This year they’re on track to sell 1.6 million vehicles. A 58% drop.
From 2016 to 2023 gm’s global share has dropped from 10.8% to 7.1%. Some of that was the result of withdrawing from Europe but most of it is China. At some point you have stop shrinking if you hope to stay in business.
China is also flooding their own market with golf cars and calling them “cars.” Each Silverado sold compares with 4-6 Chinese cars and outlasts every one of them.