Detroit’s General Motors Co. has announced that it will wind down its sales, design, and engineering operations in Australia and New Zealand; pull Chevrolet from the domestic market in Thailand this year; and retire the Holden brand by 2021.
The automaker says the actions will transform its international operations, build on the strategy it laid out in 2015 to strengthen its core business, drive cost efficiencies, and allow it to pass on markets that cannot earn an adequate return for its shareholders.
“I’ve often said that we will do the right thing, even when it’s hard, and this is one of those times,” says Mary Barra, chairman and CEO of GM. “We are restructuring our international operations, focusing on markets where we have the right strategies to drive robust returns, and prioritizing global investments that will drive growth in the future of mobility, especially in the areas of EVs and AVs.
“While these actions support our global strategy, we understand that they impact people who have contributed so much to our company,” she continues. “We will support our people, our customers, and our partners, to ensure an orderly and respectful transition in the impacted markets.”
In Australia and New Zealand, the company will focus its strategies for the market on the GM specialty vehicle business.
The company also announced that it has agreed to sell its Rayong vehicle manufacturing facility in Thailand to Great Wall Motors.
GM President Mark Reuss says 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,” says Reuss. “After considering many possible options – and putting aside our personal desires to accommodate the people and the market – we came to the conclusion that we could not prioritize further investment over all other considerations we have in a rapidly changing global industry.
“We do believe we have an opportunity to profitably grow the specialty vehicle business and plan to work with our partner to do that.”
GM also undertook a detailed analysis of the business case for future production at the Rayong manufacturing facility in Thailand. Low plant utilization and forecast volumes have made continued GM production at the site unsustainable. Without domestic manufacturing, Chevrolet is unable compete in Thailand’s new-vehicle market.
Steve Kiefer, senior vice president and president of GM International, says these decisions built on the announcement in January that GM would sell its Talegaon manufacturing facility in India; significant restructuring actions implemented in Korea; and investment in and continued optimization of South American operations.
“These are difficult decisions, but they are necessary to support our goal to have the GM International region on the pathway to growth and profitability,” says Kiefer. “GM is well positioned in our GM International core markets: South America, the Middle East, and Korea.”
GM International Operations Senior Vice President Julian Blissett says that as well as implementing plans in international core markets, GM was continuing to optimize partnerships in markets like Uzbekistan, by transferring assets and building strong supply chains to reduce costs in growth markets.
“In markets where we don’t have significant scale, such as Japan, Russia, and Europe, we are pursuing a niche presence by selling profitable, high-end imported vehicles – supported by a lean GM structure,” Blissett says. “We will continue to implement these critical business strategies, while delivering a dignified and respectful transition in impacted markets.”
In Australia, New Zealand, Thailand, and related export markets, GM says it will honor all warranties and continue to provide service and spare parts. Local operations also will continue to handle all recall and any safety-related issues, working with the appropriate governmental agencies.
As a result of these actions in Australia, New Zealand and Thailand, the company expects to incur net cash charges of approximately $300 million. The company expects to record total cash and non-cash charges of $1.1 billion. These charges primarily will be incurred in the first quarter and continuing through the fourth quarter of 2020. These charges will be considered special for EBIT-adjusted, EPS diluted-adjusted and adjusted automotive free cash flow purposes.
