General Motors layoffs: Firm Cut Jobs In China As Sales Decline And Competition Intensifies

The automaker is scaling back its operations as many foreign brands grapple with a surge of local competitors in the world's largest car market, which is currently experiencing severe overcapacity

General Motors layoffs: General Motors is reportedly reducing its workforce in China and will soon collaborate with its local partner, SAIC, to strategise a significant restructuring of its operations in the region. This move highlights the Detroit automaker's realisation that it is unlikely to achieve the sales levels it reached in 2017.

According to a Bloomberg report citing sources familiar with the situation, GM is reducing staff in several departments related to the Chinese market, including research and development. In the coming weeks, GM and SAIC will convene to explore potential capacity reductions as part of a strategic realignment for American-branded vehicles sold in China.

This reassessment marks a significant strategic shift for GM, which earned billions of dollars in China as recently as 2018. The automaker is scaling back its operations as many foreign brands grapple with a surge of local competitors in the world's largest car market, which is currently experiencing severe overcapacity.

The reset entails a strategic shift towards producing electric vehicles (EV), concentrating on higher-end models, and importing premium vehicles, according to sources familiar with the plans, states the report. Potential reductions in factory capacity and further job cuts are being considered, though these details have yet to be publicly announced. 

GM will maintain local production of more affordable vehicles and electric models through its joint venture with SAIC Motor Corp. and Wuling Motors. Some of these vehicles are also slated to be exported from China.

In a recent securities filing, the auto manufacturer stated that domestic automakers in China are focusing on expanding their market share rather than achieving profits, which has made it challenging to sustain sales volumes. Consequently, GM reported that it is collaborating with local partners to revamp its operations in China, which may lead to significant future charges if losses persist in the near term.