GM warns of $5B hit in upcoming quarterly report

Dec. 4 (UPI) -- Auto giant General Motors warned in government filings on Wednesday that it will take a $5 billion hit in the fourth quarter because of its operations reconstruction in China.

GM, which has a 50-50 joint venture in China with SAIC Motor Corp. called Shanghai General Motors, is in the middle of cost-cutting measures and operational changes there. The Chinese-based company makes Buick, Chevrolet and other GM models for the Chinese auto market.

The Detroit automaker has been facing headwinds trying to keep up with China's growing electric vehicle market and its domestic car companies.

"The company is in the process of assessing the impact of SGM's planned restructuring actions and recent efforts to stabilize market share and focus on profitability and expects to record and other contemporary impairment of our equity interest in the China JV," GM said in its report to the U.S. Securities and Exchange Commission.

"The charges are expected to be non-cash in nature and treated as special for EBIT-adjusted purposes."

China is the world's largest auto market and GM's top market for its vehicles outside of the United States. GM's equity income from its Chinese operations has tumbled nearly 79% since its high in 2014.

GM spokesman Jim Cain said the company and its Chinese partners are currently working on reducing inventory while introducing "new energy vehicles."

"The SGM team has made good progress in the second half of this year to better balance production with demand," Cain said, according to the Detroit Free Press. "Strong product launches, like the Buick GL8 family, drove quarter-on-quarter sales growth in Q3 across our JVs in China."