In a move that reminds us yet again of the growing power and credibility of China’s homegrown car industry, Mitsubishi is reported to be abandoning its production program in the country.
Though Mitsubishi has yet to officially confirm the news, Nikkei Asia says the automaker has begun talks with China’s Guangzhou Automobile Group (GAC) about pulling out of the firms’ joint venture in Hunan province, Mitsubishi’s only Chinese venture. The Japanese automaker announced in July that it would pause production and told employees to brace themselves for job cuts.
The move follows a period of disappointing sales in China for Mitsubishi, whose 2022 sales total of just 38,550 cars was down a massive 60 percent on the previous year’s tally. Despite launching the Airtrek EV in the country in late 2021 and then the Outlander hybrid a year later in an attempt to reverse the downward trend, sales continued to slide for a couple of reasons.
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One is the competitive threat posed by Chinese-branded vehicles that have improved massively in terms of design, quality, performance and technology in recent years. While local brands scored almost 51 percent of the 23.56 million sales in China last year, up more than 5 percent on their 2021 share, Japanese automakers’ share fell nearly 3 percent to 18.3 percent, research firm MarkLines says.
And another reason for Mitsubishi’s failure is the rapid growth of the EV market in China, something Chinese brands have been able to feed, but which Mitsubishi hasn’t managed to keep pace with, despite offering a couple of EVs. Ironically, GAC plans to keep the Hunan site open following Mitsubishi’s withdrawal by using the facility to build even more EVs, Nikkei Asia reports. GAC has a 50 percent stake in GAC Mitsubishi, while the remaining stake is split between Mitsubishi Motors and trading house Mitsubishi Corp.
Source: Nikkei Asia