General Motors Company (NYSE: GM) on Monday announced that it is scrapping its Australian subsidiary Holden, while also winding down operations in New Zealand and Thailand.
End Of An Era For Australia
The automaker said that it would phase out the 164-year old brand by 2021.
“I’ve often said that we will do the right thing, even when it’s hard, and this is one of those times,” GM Chairman and CEO Mary Barra said in a statement.
GM has been winding down in international markets where it has struggled to turn profits since at least 2015.
According to the automaker, while many emotions may be attached to the iconic brand, the economics doesn’t support its presence in right-hand-drive markets, most of the Commonwealth countries, like Australia and New Zealand.
“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,” GM President Mark Reuss said.
GM’s exit sparked strong reactions in Australia, including from Prime Minister Scott Morrison. “I am disappointed but not surprised,” Morris told reporters, according to the Australian: “But I am angry, like I think many Australians would be. Australian taxpayers put billions into this multinational company.”
“They let the brand just wither away on their watch. Now they are leaving it behind,” he added.
Gives Up On South-East Asia Expansion
The company will also stop selling Chevrolet cars in Thailand by the end of this year and sell its local manufacturing plant to Chinese automaker Great Wall Motor Co. Ltd. (OTC: GWLLF).
GM has established itself in China, but its attempted entry in the South-East Asian market didn’t pan out as well, forcing the latest move.
Thailand was the entry-point to the region for GM, and the winding down of sales and operations in the country effectively ends the veteran automaker’s dreams of expanding in the region.
“Low plant utilization and forecast volumes have made continued GM production at the site unsustainable,” GM said in the statement. “Without domestic manufacturing, Chevrolet is unable [to] compete in Thailand’s new-vehicle market.”
GM expects to incur cash and non-cash charges of $1.1 billion from the changes in all the countries, most of them in the first financial quarter of 2020.
The company had previously said that it expects profits in the year to be flat, as the company struggles to match up to a more tech-savvy rival Tesla Inc. (NASDAQ: TSLA).
Price Action
GM’s shares closed 1.5% lower at $34.76 on Friday.
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