Last week, GM announced that it was going to be taking $5B in charges on its China joint ventures, split between a writedown of $2.7B on its China JVs + another $2.6-2.9B in retructuring charges related to "plant closures and portfolio optimization".
https://www.reuters.com/business/autos-transportation/gm-take-more-than-5-billion-charges-china-operations-2024-12-04/
https://www.reuters.com/business/autos-transportation/gm-take-more-than-5-billion-charges-china-operations-2024-12-04/
Comments
The $5B represents cumulative equity income from around mid-2018 to today.
Off its initial investment of <$1B, it made $17B ($22B minus $5B in charges).
At least a 17x return. Not too shabby.
For a period of time, GM China generated more net earnings for GM shareholders than the rest of the business combined.
Where it did reinvest back into the business, with the benefit of hindsight, we now know it did not do it particularly well or efficiently.
And once EV technology came of age, the writing was on the wall in China. It was only a matter of time.
The lesson isn't that GM should have never entered China.
It earned tens of billions of incremental dollars for doing almost no work and putting very little capital at risk.