General Motors has announced it will be ceasing its operations in some international markets and concentrate on the profit-making regions. GM stock hasn’t reacted significantly.
General Motors (NYSE: GM) through its official website on February 16, 2020, announced it will accelerate its transformation of the international markets. The transformation will entail ceasing all operations by 2021 at Holden in Australia. In addition, the company is in talks with the Chinese company, Great Wall Motors, to sell its Thailand manufacturing plant. The company will also stop the production and domestic sale of Chevrolet in Thailand by the end of 2020.
According to the press release, all these are a result of the decision made back in 2015 in a comprehensive strategic plan to bolsters its main business in profit returning regions. Besides that, the company has announced it will be winding up the design, its engineering operations and sales in New Zealand and also in Australia.
Furthermore, the closure will enable the failing company to concentrate and focus its strategies on its main vehicle business.
What Will Come Next for GM?
In her statement, GM CEO Mary Barra, she said the company will strive to do the right thing even if it is the hard decision. Barra also noted that the company is restructuring its international operations in order to boost returns, and concentrate on future mobility investment like the EVs and also the AVs. She also said that the company will oversee a smooth transition in consideration of the impact on people who had invested in the company and also the customers.
On the other hand, according to GM President Mark Reuss, the company had explored all the available options to continue its operation at Holden but unfortunately, none proved worth the investment. Reuss in his statement was very apologetic for the loyal customers from Australia and New Zealand considering the great input to the company. He promised all the customers from the affected regions that the company will be working together with its partners to deliver more specialized services at the same time counting on better returns.
With the company having strategic companies in South Africa, Korea and also in the Middle East, the affected regions will be served immensely by the nearest hub. In the affected countries, the company has promised to honor the pending warranties and also provide quality services with original spare parts in the market.
Impact on GM Stock
As a result, GM stock, as listed in NYSE, has dipped down to trade at $34.76 after successfully breaking out last week. However, the company is still confident in the move and did not severely affect the stocks at the time of writing. In the after-closing hours, the price is slightly up ($34.90).
In addition, as a result, the company will incur net cash charges of about $300 million. The company will record total charges of approximately $1.1 billion which will be covered by the first quarter up to the fourth in 2020.
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