General Motors to further extend its strategy of quitting unprofitable markets in 2020

In its announcement on Sunday, General Motors said that it plans on exiting multiple markets in the upcoming months. Keeping its focus on operations in the U.S and China, the company remarked that it will soon be quitting engineering, sales, and design operations in Australia and New Zealand. Its Holden brand, the company added, will be retired in 2021.

Sunday’s announcement also highlighted that the automaker has finalized a deal with China’s Great Wall Motor that will be taking over GM’s engine factory and manufacturing plant in Thailand. The transaction, as per the automaker, will be completed before next year.

GM Wishes To Focus On South Korean, Latin American, Chinese, And The U.S Markets

General Motors has been committed to streamlining its global operations, as part of which, the company has strategized to exit the markets that have failed to be significantly profitable. From here on, the car manufacturer is likely to keep its focus on South Korean, Latin American, Chinese, and the U.S markets.

In her presentation on February 5^th, CFO Dhivya Suryadevara appreciated the company’s efforts directed at restructuring global operations that resulted in a massive $2 billion improvement in profit margins as compared to 2018’s figures.

While GM’s fourth-quarter performance results were noted better than expected, the company said that in fiscal 2020, its profit is expected to remain flat owing to the United Auto Workers strike that spanned over 40-days and cost $3.6 billion to the automaker.  

Thailand could offer an opportunity for GM to expand its Southeast Asian operations but the company decided to compromise for the sake of its long-term goals as it sold the Thailand plant to China’s Great Wall Motor.

Restructuring Global Operations Can Cost $1.1 Billion In Cash And Non-Cash Charges

The aforementioned restructuring of operations can be expected to amount to $1.1 billion in charges (cash and non-cash). In terms of job cuts, GM revealed a count of 1,500 in Thailand and 828 in Australia and New Zealand combined.

According to CEO Mary Barra, profit margins is a greater priority for the car manufacturer as compared to global presence or sales volume. Barra joined GM as a CEO in 2014. In 2017, she decided in favor of quitting multiple African markets including that of South Africa. She also sold GM’s Vauxhall and European Opel businesses to Peugeot SA in the same year.

Barra has also pulled out the company from other prominent markets like Indonesia, Vietnam, and India. Great Wall has also signed a deal with GM for its Indian manufacturing plant; another transaction that is likely to be completed by the end of this year.