GM Stock Faces More Pressure On $5B Impact Linked To China Business: Retail Hopes Slide

General Motors shares fell over 1% pre-market Wednesday, on track to extend losses for a third consecutive session, and retail sentiment soured following the announcement of significant financial charges tied to its China joint ventures.

The company in a regulatory filing said that its audit committee determined that a material impairment of its interest in SAIC General Motors Corporation Limited (SGM) was necessary. This decision follows the finalization of a new business forecast and restructuring efforts to address market challenges and increased competition in China.

GM anticipates recording an impairment of its equity interest in the China JVs ranging from $2.6 billion to $2.9 billion in the fourth quarter of 2024. 

Additionally, the automaker expects to recognize equity losses of about $2.7 billion from SGM’s restructuring, which includes plant closures and portfolio optimization. 

These charges are non-cash and will be classified as special items for EBIT-adjusted purposes.

GM sentiment and message volume on Dec 4 as of 8 am ET | source: Stocktwits

On Stocktwits, retail sentiment for GM dropped to ‘bearish’ levels before the bell on Wednesday.

The SGM joint venture, once a major profit center generating $500 million quarterly, has reportedly seen profitability plummet to less than one-tenth of that figure in the past year. 

This decline mirrors broader market shifts in China, where the rise of battery-electric and plug-in hybrid vehicles has eroded demand for gasoline-powered cars. 

By 2026, such vehicles are projected to account for 75% of new car sales, further squeezing traditional automakers, according to Barron’s.

The news comes a day after GM announced plans to sell its $2.6 billion stake in the nearly completed Ultium Cells LLC battery plant in Lansing, Michigan, a move that also failed to inspire retail investors. 

Meanwhile, concerns over President-elect Donald Trump’s proposed 25% import tariffs on Mexican and Canadian products have added pressure, given GM’s reliance on cross-border supply chains.

Despite recent headwinds, GM shares are up 49% year-to-date, outperforming the S&P 500’s 27% gain as of the last close.

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