KUALA LUMPUR, Dec 4 (Bernama) -- Bursa Malaysia rallied to close broadly higher on Wednesday amid strong buying interests mainly in utility and technology stocks, with the benchmark index gaining 0.44 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 7.13 points to 1,614.09 from Tuesday’s close of 1,606.96. The index opened marginally higher at 1,606.97 and moved between 1,606.53 and 1,616.03 throughout the day. Advancers thumped decliners 727 to 381 on the broader market, with 522 counters unchanged, 781 untraded and 10 suspended. Turnover advanced to 3.60 billion units valued at RM3.30 billion versus 3.32 billion units valued at RM3.30 billion on Tuesday.
General Motors (GM) announced on Wednesday that it will take non-cash charges exceeding $5 billion (RM22.2 billion) related to its joint venture in China. The charges stem from restructuring efforts and a reassessment of the joint venture’s value as GM contends with declining performance in the world's largest auto market.
Details of the Charges
- Restructuring Costs: Estimated between $2.6 billion and $2.9 billion.
- Reduced Joint-Venture Value: Reflects a charge of $2.7 billion.
These charges will be recorded in GM’s fourth-quarter earnings, impacting net income but not adjusted results, according to the automaker.
China Market Challenges
GM's partnership with SAIC Motors in China produces Buick, Chevrolet, and Cadillac vehicles. However, competition from domestic automakers and an intensifying price war have significantly eroded its market share:
- Sales Decline: SAIC-GM sales dropped 59% in the first 11 months of 2024 to 370,989 units, compared to local leader BYD, which sold over 10 times as many vehicles.
- Past Performance: SAIC-GM sales peaked at 2 million units in 2018.
- Losses: GM reported a loss of $350 million in the region in the first three quarters of 2024.
CEO Mary Barra’s Turnaround Efforts
GM CEO Mary Barra has been reshaping the company’s operations in China, aiming to stem losses and boost performance:
- Dealer Inventory Reduction: Barra promised “a significant reduction in dealer inventory and modest improvements in sales and share” by year-end.
- Strategic Changes: While GM has not disclosed full details of its restructuring, SAIC previously announced plans to cut thousands of jobs, including those at the GM joint venture.
Barra has openly acknowledged the challenges in the Chinese market, calling it “unsustainable” due to widespread losses among automakers.
Competitive Pressures
GM is not alone in facing difficulties in China:
- Volkswagen (VW): Lost its best-selling brand title to BYD in 2022. VW is now partnering with Xpeng Motors and SAIC to advance EV technology and has extended its joint venture contract with SAIC through 2040.
- Nissan Motor: Announced plans to cut 9,000 jobs and reduce manufacturing capacity due to declining sales in China and the U.S.
- Ford Motor: Shifting its China operations toward a vehicle export hub.
Analysts’ Perspectives
Some analysts suggest that Detroit automakers, including GM, may need to consider exiting the Chinese market altogether. Despite the immense potential of the region, the dominance of local manufacturers and intensifying competition have made profitability increasingly elusive for foreign brands.
Outlook
GM’s restructuring marks a critical attempt to salvage its position in the Chinese market. As it competes against aggressive domestic automakers and navigates shifting market dynamics, GM’s future strategy in China will be closely watched by shareholders and industry observers alike.
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