Japan's Mitsubishi will withdraw from Chinese production!

According to Nikkei Asia, Japan's Mitsubishi Motors will decide to officially stop producing cars in China, and the company hopes to withdraw its investment in a local joint venture with GAC Group, and the joint venture with GAC Group may be retained, but GAC may take over its production base in China, which is currently under negotiation.

Mitsubishi Motors will withdraw production at its Changsha plant in Hunan Province, operated by GAC Mitsubishi Motors, a joint venture with its joint venture partner GAC Group. For Mitsubishi Motors, this is currently the only new car plant in China. Affected by sluggish sales, the plant has stopped production of new vehicles since March and will not restart.

In the future, the plant is expected to be used as a production base for pure electric vehicles of the GAC Group, minimizing the impact on employment. In 2012, GAC-Mitsubishi Automobile Joint Venture was established, with GAC Group Co., Ltd. holding 50% of the shares, Mitsubishi Motor Industry Co., Ltd. holding 30% of the shares, and Mitsubishi Corporation holding 20% of the shares. The joint venture will be retained, but Mitsubishi Motors and Mitsubishi Corporation are expected to withdraw their investments.

Mitsubishi Motors has been exporting commercial vehicles to China since the 1970s and has entered into a joint venture with Southeast Motor from 2006 to 2021. GAC-Mitsubishi was founded in 2012 and sold 140,000 units in 2018 at its peak.

However, in 2016, Mitsubishi fell into crisis due to the so-called falsification of fuel efficiency tests, and failed to adjust its strategic decisions in the Chinese market in time during the stage when new energy became popular to occupy the market, resulting in the rapid loss of competitiveness of the entire automotive industry.

In 2022, Mitsubishi Motors' sales in China decreased by 60% y/y to only 38,550 units. In order to stimulate sales, the company launched a hybrid version of the new Outlander for the Chinese market in December 2022, but sales were significantly lower than planned.

In the first quarter of 2023, due to the sluggish sales of Outlander and other models, GAC Mitsubishi announced the suspension of production at its plant in Changsha, Hunan Province, and directly erased GAC Mitsubishi's data in the production and sales data released by GAC Group in the second quarter, triggering widespread speculation in the industry, and the official response at the time was that GAC Mitsubishi data were merged into other items, and sales were not enough to be listed separately.

In fact, news of Mitsubishi Motors' suspension of production in China has been frequent in recent months. On September 27, several media outlets reported that Mitsubishi Motors had decided to stop vehicle production in China due to sluggish sales. At that time, the head of Mitsubishi's public relations department, Toruji Inoue, responded that the report was not officially released by the company, and continued to talk to shareholders without making any decisions.

With the withdrawal of production from China, Mitsubishi Motors' capital will be redirected to operations in Southeast Asia and Oceania, which account for about one-third of annual sales.