General Motors (GM) has announced a $5 billion restructuring plan for its joint venture with SAIC, marking a significant step in the decoupling of the U.S. and Chinese automotive industries.

This move signals a comprehensive retreat by American automakers from the Chinese market.

While Chinese car manufacturers struggle to enter the U.S. market, American automakers, including GM, are losing their foothold in China. The collapse of GM’s ambitious “China Dream” underscores the deepening separation between the two nations' auto industries.

Following the footsteps of other multinational carmakers, GM’s decision reflects a broader trend of international brands scaling back operations in China. Amid rising local competition, even leading automakers like Volkswagen and Toyota might face difficulties maintaining a significant presence.

In China's automotive sector, there’s an unspoken rule: when automakers issue strong denials about rumors involving new models, leadership changes, or factory closures, these denials often serve as unofficial confirmations. GM’s recent denial, however, diverges from the norm.

While GM China declared that its business remains a “premium asset,” GM headquarters announced plans to spend over $5 billion restructuring SAIC-GM. This includes writing down $2.6 to $2.9 billion in equity and recognizing $2.7 billion in costs related to plant closures and production adjustments.

Once a pillar of SAIC Group alongside SAIC-Volkswagen, SAIC-GM now faces significant challenges. This downturn reflects the broader retreat of U.S. automakers in China, following the struggles of Ford and Jeep.

In 2017, SAIC-GM reached its peak, selling 2 million vehicles and setting the benchmark for joint ventures in China. Despite introducing cutting-edge models and expanding its Cadillac luxury lineup, SAIC-GM’s sales have steadily declined since then.

In November 2024, SAIC-GM reported terminal sales of 66,797 units (including exports), marking five consecutive months of month-over-month growth. However, total sales from January to November stood at just 600,000 units—far below the 1.001 million units sold in 2023. Full-year sales for 2024 are projected to drop by over 30%.

In Q3 2024, GM’s China operations reported a loss of $137 million, with cumulative losses for the first three quarters reaching $347 million (approximately 2.5 billion yuan). Declining sales, an aggressive “one-price” strategy, and inventory reductions have significantly eroded SAIC-GM’s profitability, further impacting GM’s global earnings.

The 2008 financial crisis forced GM into prolonged challenges, leading to the sale of Opel and its exit from Europe’s increasingly regulated combustion engine market. Now, GM faces a similar retreat in China, the world’s largest automotive market.

Despite its past success, including pioneering exports of Chinese-made vehicles to North America and launching competitive EVs on the Ultium platform, SAIC-GM has struggled to counteract declining sales. Even flagship models like the Buick GL8, featuring SAIC’s plug-in hybrid technology, failed to reverse the trend.

This retreat underscores GM’s shift in priorities. As a quasi-state-owned American automaker, GM has increasingly prioritized financial metrics, leading to cost-cutting measures that some interpret as effectively subsidizing Chinese consumers with American resources.

China was once GM’s largest market, but its dominance has waned amidst the rapid ascent of Chinese automakers. Companies like BYD, Geely, and Chery have achieved significant technological, design, and quality breakthroughs, rivaling century-old global brands in market share and influence.

For multinational automakers, the inability to compete with China’s aggressive pricing and innovation has become glaringly evident. Many attribute this to China’s so-called overcapacity, market saturation, and price wars.

Despite profiting from China's economic boom, most global automakers have failed to fully integrate into the country’s automotive ecosystem. Instead, they primarily relied on importing global technologies and localized production. In contrast, domestic players have embraced high-quality, cost-effective strategies, further eroding the market share of international brands.

Unlike brands such as Changan Suzuki or GAC Mitsubishi, which exited China entirely, SAIC-GM still has pathways to restructure. However, following Ford’s recent shift to niche markets in China, SAIC-GM might retreat from the top-ten rankings, accompanied by major adjustments to Chevrolet and Cadillac.

In North America, GM, Ford, and Chrysler face fierce competition from Toyota and Honda. Meanwhile, overseas markets present limited opportunities, as Europe and China transition rapidly to electric mobility—aligning with the global shift toward sustainability.

The decoupling of U.S. and Chinese auto industries signals a harsh reality. While Chinese automakers remain locked out of the North American market, American automakers have effectively conceded their position in China.

China remains the largest automotive market globally, offering immense potential. However, SAIC-GM has squandered valuable time and opportunities.

In contrast, Volkswagen and Toyota have deepened their partnerships with Chinese automakers, advancing into collaborative R&D and localized technologies. For instance, Volkswagen’s investment in XPeng and Toyota’s joint ventures with BYD and GAC have demonstrated their commitment to staying competitive in China.

GM, once a top-three player in the Chinese market, now lags behind due to its failure to upgrade its cooperation model with SAIC. Whether due to complacency or shortsightedness, GM’s stagnation reflects missed opportunities to align with market trends.

GM’s recent decision to abandon its $10 billion, eight-year investment in the Cruise autonomous taxi project offers a glimpse into its uncertain future.

Although SAIC-GM has sufficient resources to navigate downsizing, its struggles illustrate the brutal realities of a shifting industry landscape. As Ford, Jeep, and now GM retreat, the question remains: How much worse could this get?

Ultimately, the decoupling of U.S. and Chinese auto industries seems inevitable. While Chinese automakers face barriers in the U.S., American automakers have relinquished their once-dominant position in the world’s largest market.