General Motors expects to pay more than a billion dollars to exit both the Australian, New Zealand and Thailand new-car markets.
GM made the shock announcement it was axing Holden, while also confirming that it would withdraw Chevrolet from Thailand, and sell its manufacturing facility in that country to Great Wall Motors.
FULL COVERAGE: Holden brand to cease operations in Australia
This will result in a bill for GM in the region of US$1.1 billion, which equates to A$1.6 billion at current conversion rates.
“As a result of these actions in Australia, New Zealand and Thailand, the company expects to incur net cash charges of approximately US$300 million,” GM said in a statement.
“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.”
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Senior Vice President, GM International Operations, Julian Blissett, said that taking care of the estimated 600 Holden employees that will lose their jobs is of an extremely high priority.
“We have made it very clear that we will treat people fairly,” he said during a press conference.
“I don’t want to go into details or specifics, but there is one headline figure of how much this will cost – it is an expensive undertaking.
“It is an agonising decision for us and not one that we take easily.”
Blissett also confirmed what is happening in Thailand played a part in Holden’s demise.
“The decision here is also affected by what we are doing elsewhere in the world, relative to Thailand,” he added.
“The total bill for both of those market exits will be north of a billion US dollars.”
A statement from the US company said “it had signed a binding term sheet with Great Wall Motors to purchase GM’s Rayong vehicle manufacturing facility in Thailand; and would withdraw Chevrolet from the domestic market in Thailand by the end of 2020.”
“Low plant utilization and forecast volumes have made continued GM production at the site unsustainable,” it continued.
“Without domestic manufacturing, Chevrolet is unable compete in Thailand’s new-vehicle market.”
The sale comes amidst other significant recent international restructuring efforts by GM, including selling the Talegaon factory in India.