General Motors is exiting Australia, New Zealand and Thailand to save costs in the under performing markets and better hone its focus on growth markets as well as on its electric vehicle and self-driving car strategies.
As a result, GM said it expects to incur net cash charges of $300 million and 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.
But the move will not affect GM’s U.S. operations, a GM spokesman said. GM’s Spring Hill Assembly plant in Tennessee builds the Holden Acadia SUV for Australia, but the volume is so small that it will not affect Spring Hill’s production or employment, the spokesman said. The plant will make up the volume with its other products: the GMC Acadia and the Cadillac XT5 and XT6 SUVs.
“I’ve often said that we will do the right thing, even when it’s hard, and this is one of those times,” said GM CEO Mary Barra in a news release Sunday night. “We are restructuring our international operations, 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, especially in the areas of EVs and AVs.”
GM employs 828 employees in Australia and New Zealand and 1,500 in Thailand, a GM spokesman said.
Barra said that the actions support GM’s global strategy, which it laid out in 2015, but, “We understand that they impact people who have contributed so much to our company. We will support our people, our customers and our partners, to ensure an orderly and respectful transition in the impacted markets.”
GM said it will wind down sales, design and engineering operations in Australia and New Zealand and retire the Holden brand by 2021. It will focus its strategies for the market on the GM specialty vehicle business.
GM Holden’s market share peaked in 2001 at 21.4%, but it’s seen a steady decline since 2003, bottoming out at just 4.1% in 2019.
The automaker also said it had signed a binding term sheet with Great Wall Motors to purchase GM’s Rayong vehicle manufacturing facility in Thailand.
GM will withdraw Chevrolet from the domestic market in Thailand by the end of this year.
GM’s plant in Rayong builds the Colorado pickup truck and Trailblazer SUV under the Chevrolet and Holden brands. The vehicles are sold in 16 markets across Southeast Asia, Australia, New Zealand, Middle East, Central America and Uzbekistan.
GM opened the Rayong plant in 2000 and has built more than 1.35 million vehicles there. GM’s produced about 500,000 engines at GM PowertrainThailand since 2011.
GM had considered a “range of options” to continue Holden operations, President Mark Reuss said. But all would required large investments for the highly fragmented right-hand-drive market and they would not deliver a return on investment.
“After considering many possible options — and putting aside our personal desires to accommodate the people and the market — we came to the conclusion that we could not prioritize further investment over all other considerations we have in a rapidly changing global industry,” said Reuss.
GM will work with its partner, Holden Specialty Vehicles, in Australia and New Zealand to profitably grow the specialty vehicle business there.
Reuss said GM also studied the business case for future production at the Rayong manufacturing facility in Thailand. But low plant utilization and weak predicted sales volumes make GM production at the site unsustainable. Without domestic manufacturing, Chevrolet is unable compete in Thailand’s new-vehicle market, GM said.
Last month, GM said it would sell its Talegaon manufacturing facility in India and do significant restructuring in Korea. It also said it will continue to invest in its South American operations.
GM said it is well positioned in core markets such as South America, the Middle East and Korea.
“In markets where we don’t have significant scale, such as Japan, Russia and Europe, we are pursuing a niche presence by selling profitable, high-end imported vehicles –supported by a lean GM structure,” said Julian Blisset, GM’s international operations senior vice president.
In Australia, New Zealand, Thailand and related export markets, GM said it will honor all warranties and continue to provide service and spare parts. Local operations will also continue to handle all recall and any safety-related issues.