On August 13th, insiders revealed that General Motors is cutting personnel in departments related to the Chinese market, including the research and development department. In the coming weeks, General Motors and SAIC will discuss possible production capacity reductions as part of the company's sales strategy adjustment in China. In response to the above news, General Motors China told reporters, "Measures taken by the Chinese joint venture were mentioned when the group released its global financial report in the second quarter."
On August 13th, General Motors, which is on the path of transformation, is considering strategic adjustments to its China ventures. According to insiders on August 13th, General Motors is cutting personnel in departments related to the Chinese market, including research and development. In the coming weeks, General Motors and SAIC will discuss possible production capacity reductions, which is part of the company's sales strategy adjustment in China. "The restructuring involves a shift to producing electric vehicles, focusing on higher-end models and importing luxury cars, and General Motors hopes to restore profitable business operations by 2027."
In the second quarter global financial report, the group mentioned the measures being taken by its China joint ventures. In response to the news, General Motors China stated to reporters that it had already announced, at that time, that the group was working closely with its joint venture partner to restructure its business to achieve profitability and sustainable development in the face of changing market competition, overcapacity, and the challenges brought by aggressive pricing. To this end, a series of important measures have been taken, including reducing inventory, producing on demand, protecting the pricing system and reducing fixed costs.
In the latest application for securities submitted by General Motors, the company stated that the strategic focus of current domestic Chinese automobile manufacturers is significantly biased towards market share expansion, rather than short-term profitability pursuit. This has made it difficult for General Motors to maintain the same level of sales in China.
SAIC-GM is facing a challenging situation in the context of declining sales and a lack of momentum. In May, rumors circulated that SAIC-GM had planned to arrange a two-to-three-month vacation for its production line workers through a "high temperature suspension" method, involving all factories in its four major production bases. Subsequently, SAIC-GM responded to this event by stating that the idea of a three-month suspension was entirely a rumor. In addition to the suspension rumor, SAIC-GM was also rumored to complete a 30% layoff this year. It was reported that the company's layoffs would not take the form of a one-time large-scale layoff, with a considerable portion being achieved through the introduction of stricter performance standards and severance pay for lower-level employees. This system is expected to be implemented this year. The company has denied these rumors.
SAIC's production and sales report showed that SAIC-GM sold 15,000 vehicles in July, down 82.42% from 85,301 vehicles in the same period last year; January to July cumulative sales were 240,579 vehicles, down 55.14% year-on-year. As of the closest quarter ending June 30th, General Motors' Chinese business had a loss of 0.104 billion USD, and the total loss for the first half of the year amounted to 0.21 billion USD. Originally, General Motors had hoped to cut its China business production in the first quarter to restore profitability.
"American cars have not been popular in China in recent years." Insiders pointed out that Chinese people prefer cars that are spacious and fuel-efficient, which does not suit the characteristics of American cars. In addition, SAIC-GM's new energy vehicles have yet to make a breakthrough in the domestic market in recent years. "The automobile market has been shifting to new energy in recent years, but it seems that the footsteps of the American car companies in this area have been a bit slow, with only a few new energy cars launched, other than Tesla."
Faced with difficulties, SAIC-GM is restructuring its leadership. On August 9th, SAIC-GM announced that Lu Xiao will be the new general manager of SAIC-GM; and Xue Haitao will be the new vice president of SAIC-GM, responsible for relevant marketing work. SAIC-GM stated that with the full support of its shareholders, the new leadership team will continue to accelerate the company's transformation towards electrification and intelligentization, focus on innovative breakthroughs in technology, products and marketing, and face fierce market competition.
"As a traditional joint venture company, it is still not easy for SAIC-GM to turn things around, but changing its leadership team could accelerate this process." In the view of the above-mentioned insiders, given the current situation, it was indeed necessary for SAIC-GM to make adjustments at its executive level. Lu Xiao's deep technical background and Xue Haitao's young marketing savvy will complement each other, which is undoubtedly a major bullish boost for SAIC-GM, which is currently in the mud.
It is worth noting that General Motors has been considering restructuring its China business for months, and Chief Financial Officer Paul Jacobson hinted at a restructuring in the August 8th investor report. At that time, Jacobson stated that the company has committed to maintaining a stable cash level of its China business, which to some extent could be self-sufficient, without the need for external injection of new funds. "The Chinese business may need adjustment, but overall it is still good assets. "Jacobson admitted."