General Motors announced that it will be winding its sales and operations in Australia and New Zealand, while it will be selling off one of its plants in Thailand as it plans to concentrate more on its high-profit markets like the United States and China. The decision is in a bid to restructure its global business which is costing the company billions of dollars.
The American carmaker had a difficult 2019 and has said that it expects a flat profit in 2020. Moreover, the company has also been aggressively making investments in electric vehicles to catch up in the race with the likes of Tesla. General Motors had started retreating from the Asian market five years back and now its decision to exit Australia and New Zealand is a clear indication that the company wants to focus only on the China market in Asia.
General Motors re-strategizes
General Motors has been suffering for quite some time will operating costs ballooning in its unprofitable markets. The company said that it will stop its sales, engineering and designing operations in Australia and New Zealand by 2021. Also, it will discontinue its Holden brand in these two countries. The company also said that it has plans of winding business in Thailand and is likely to withdraw its Chevrolet brand by end 2020 and sell off the plant to Chinese carmaker Great Wall Motors.
GM Chair and CEO Mary Barra in a statement said that the company will be "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. She also said that it will cost the company $1.1 billion in charges for the actions, including $300 million in cash, which will counted in the first quarter itself. The move will also see loss of 600 jobs in Australia, while another 1,500 will be affected in Thailand.
A long-term restructuring plan
The announcement comes as part of General Motors' long-term plans of restructuring its global business. The restructuring process was initially announced in 2015, when the company said that it would be focusing only on its profitable markets and making investments towards driving "growth in the future of mobility," particularly in electric vehicles.
The carmaker in its first move to exit Asia, announced in 2015 that it will stop manufacturing GM-branded cars in Indonesia. General Motors ended production in Australia more than two years ago. The company also sold its European operations to PSA Groupe in 2017 and also ended it operations completely in India and Russia. The same year it also exited South Africa and other African markets.