General Motors will leave the Australian, New Zealand, and Thai markets amid a restructuring drive estimated to cost more than $1 billion.
Hilary Russ and Yilei Sun reported the news for Reuters:
General Motors Co (GM.N) said it would wind down its Australian and New Zealand operations and sell a Thai plant in the latest restructuring of its global business, costing the U.S. auto maker $1.1 billion.
The moves will accelerate GM’s retreat from unprofitable markets, making it more dependent on the United States, China, Latin America and South Korea, and give up an opening to expand in Southeast Asia.
They come after the company told analysts this month that restructuring GM’s international operations outside of China to produce profit margins in the mid-single digits would represent “a $2 billion improvement” on two years ago.
GM has forecast a flat profit for 2020 after a difficult 2019, and is facing ballooning interest in electric car rival Tesla Inc (TSLA.O).
CNN’s Michelle Toh wrote:
General Motors (GM) is killing off the iconic Holden brand and pulling out of Australia and New Zealand, the latest in a series of moves to shrink the US carmaker’s global presence as it ramps up investments in electric and autonomous vehicles.
The company announced Sunday that it would retire the Holden brand, which has existed in Australia for more than 160 years, by 2021. It will also shutter its sales, design and engineering operations in Australia and New Zealand.
General Motors added that it will pull back elsewhere in Asia Pacific. It will stop selling Chevrolet vehicles in Thailand by the end of this year, and it has agreed to sell a manufacturing plant there to Chinese automaker Great Wall Motors.
The US carmaker expects to take a $1.1 billion financial hit from the retreat, roughly $300 million of which will be a cash loss.
General Motors has been paring back operations in Australia for years. In 2013, it announced that it would stop making cars there, joining a long line of major automakers to do so, ultimately leading to the demise of car manufacturing in the country.
Michael Wyland from CNBC reported:
Chairman and CEO Mary Barra said the actions are part of the automaker’s global restructuring, which was initially announced in 2015, to concentrate on profitable markets and prioritize investment on driving “growth in the future of mobility,” especially in all-electric and autonomous vehicles.
“I’ve often said that we will do the right thing, even when it’s hard, and this is one of those times,” Barra said in a release.
The announcement comes more than two years after GM ended vehicle manufacturing in Australia, a place the automaker used as a proving ground for up-and-coming executives, including GM President Mark Reuss.
Reuss, in the release, said the company explored a range of options to continue Holden operations, but “none could overcome the challenges of the investments needed for the highly fragmented right-hand-drive market, the economics to support growing the brand, and delivering an appropriate return on investment.”
“At the highest levels of our company we have the deepest respect for Holden’s heritage and contribution to our company and to the countries of Australia and New Zealand,” Reuss said.
