General Motors Company's (NYSE:GM) joint venture with China's SAIC General Motors Corporation, has been a profitable business since it was formed in 1997 — until this year, that is.
The company lost $210 million during the first six months of this year, according to earnings reports — $106 million for the first quarter and $104 million for the second quarter.
General Motors said it's trying to restructure the venture with SAIC as a result of the continuing losses, CNBC reported.
SAIC-GM operates seven plants in China that make vehicles under the Buick, Chevrolet and Cadillac brands for the Chinese consumer. Vehicle sales have fallen steadily over the years, from 2 million vehicles sold in 2017 to 1 million units sold in 2023, according to SAIC's website.
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In a second-quarter earnings call with analysts on Tuesday, GM CEO Mary Barra said SAIC-GM is taking steps to reduce its inventory and align production to falling market demand while also protecting pricing and lowering fixed costs.
"But it's clear the steps we have taken, while significant, have not been enough," she said during the call.
"We had expected to return to profitability in China in the second quarter. However, we reported a loss and we expect the rest of the year will remain challenging, because the headwinds are not easy," Barra added. "We are working closely with our JV partner to restructure the business to make it profitable and sustainable."
On Tuesday, General Motors posted a fiscal second-quarter 2024 sales growth of 7.2% year-on-year to $47.97 billion, beating the analyst consensus estimate of $45.3 billion. Adjusted earnings per share of $3.06 exceeded the analyst estimate of $2.72.
Price Action: General Motors declined 6.42% on Tuesday to close at $46.38. It slipped 1.38% to $45.74 in Wednesday's premarket trading.
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