GM announced that it will wind down sales, design and engineering operations in Australia and New Zealand and retire the Holden brand by 2021. The company will focus its strategies for the market on the GM specialty vehicle business. The company also announced that it had signed a binding term sheet with Great Wall Motors for the purchase of GM’s Rayong vehicle manufacturing facility in Thailand; and that it will withdraw Chevrolet from the domestic market in Thailand by the end of 2020.
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 will primarily 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.
GM President Mark Reuss said 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.
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.
GM Senior Vice President and President GM International Steve Kiefer said 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.
GM International Operations Senior Vice President Julian Blissett said that as well as implementing plans in international core markets, GM was continuing to optimize partnerships in markets such as Uzbekistan by transferring assets and building strong supply chains to reduce costs in growth markets.