U.S.-based automaker General Motors (GM) is reportedly pulling the plug on a Chinese plant amid its restructuring plans in the region, according to an anonymous company source. The plant manufactures the Buick GL8 minivan and Chevrolet Tracker SUV for the Chinese market. Notably, GM partners with SAIC Motors to build Buick, Chevrolet, and Cadillac vehicles in China.
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GM Shifts Focus to Rebuild China Strategy
GM is revamping its operations in China after facing significant losses. CEO Mary Barra has stated the goal of reducing dealer inventory while gradually increasing sales and market share in the region.
Moving forward, Barra emphasized that GM’s strategy will center around Cadillac, Buick, and its premium import vehicles. She highlighted that these brands are highly appealing to a specific segment of Chinese consumers, and GM is well-positioned to build a successful business in that niche.
Overall, China, the world’s largest auto market, has become a tougher market for foreign automakers as domestic companies like BYD (BYDDF) take advantage of government subsidies to dominate the region. In the fourth quarter of 2024, GM recorded more than $5 billion in special charges, including $4 billion in non-cash restructuring costs and impairments tied to its China joint ventures.
GM Reassesses Parts Supply as Trump’s China Tariff Hits
Meanwhile, GM is reassessing its supply chain in China after U.S. President Donald Trump imposed a 10% additional tariff that went into effect on February 10. U.S. automakers depend on Chinese parts for vehicles made in the U.S. and manufacture cars in China for the U.S. market. Given this interconnected trade, the new tariffs will inevitably have an impact, though most analysts expect the effects to be minimal.
Is GM Stock a Buy, Sell, or Hold?
Last week, Wedbush maintained its Buy rating on GM stock, projecting a 24% growth rate. The firm is optimistic about GM’s EV (electric vehicle) strategy, viewing it as a transformative opportunity.
Overall, analysts remain cautiously optimistic about GM stock, with a Moderate Buy consensus rating based on eight Buys, five Holds, and two Sells. The average price target for GM is $58.80, suggesting an upside potential of 22% from its current price.
Year-to-date, GM stock has declined by over 9%.
