The Rapid Decline of Legacy Automakers: GM’s Exit from China

Legacy automakers are crumbling, and it's happening far more quickly than the mainstream media would have you believe. While American and Australian outlets pretend everything is business as usual, German media are at least acknowledging the shift. But make no mistake—this is not business as usual.

GM’s Retreat from China

General Motors is a prime example. The company is closing a plant in the northeastern Chinese city of Shenyang as part of its so-called restructuring. Last year, GM lost billions in China—not just on sales but also in restructuring costs and asset write-offs. While investment analysts and hedge funds used to value automakers based on factory floor space, production capacity, and robotics, those calculations are proving increasingly flawed. The reality is that these assets are rapidly depreciating, and when automakers attempt to sell them, they do so at enormous losses. Take Hyundai’s factory in China: originally worth $1.2 to $1.4 billion, it was sold for just $280 million. Nissan, GM, and others are shutting down plants, yet few seem to acknowledge what this really means for their financial futures.

The Fallacy of Legacy Automaker Valuations

The traditional automakers' defenders argue that these companies still have billions in assets and the ability to ramp up production whenever they want. But the truth is far less comforting. These automakers are not innovating fast enough to compete with Chinese EV makers, many of which are now backed by the Chinese government. However, it’s not just subsidies making the difference—these companies have simply outmaneuvered legacy players like GM and Nissan, who rested on their laurels for too long.

GM’s Plant Closure: A Sign of Deeper Trouble

GM’s recent plant closure is only the latest in a string of setbacks. The factory produced Buick GL8 minivans and Chevrolet Tracker SUVs—both internal combustion vehicles, a segment where Chinese automakers now dominate. It makes no sense for GM to keep these plants open when they can't compete on cost, quality, or innovation. While Reuters and others frame GM’s struggles as a byproduct of government-backed competition, the truth is that GM and other legacy automakers failed to adapt. They believed the status quo would hold forever. Now, they're paying the price.

Buick: A Weak Strategy for GM’s Future

Despite mounting losses, GM CEO Mary Barra continues to insist that their future in China will be built on Cadillac, Buick, and premium imports. But in China, Buick is hardly considered a premium brand—it's more akin to an economy car manufacturer, positioned alongside brands like Nissan Sentra and Volkswagen Lavida. The idea that GM will succeed by doubling down on Buick is wishful thinking at best. Investors might buy into the spin for now, but the writing is on the wall.

The End of an Era

GM is not alone. The entire legacy auto industry is in trouble. The old ways of valuing companies, of assuming factories and brand heritage will ensure long-term viability, are no longer relevant. The market has changed. Companies like Tesla, BYD, and NIO are leading the charge, while GM and others scramble to restructure, cut losses, and buy themselves time. But time is running out.

This is not just a restructuring. This is the unraveling of an industry that thought it was too big to fail.