Mitsubishi Motors Corp. is set to halt car production in China, marking a significant decision after years of lackluster sales in the country, as reported by Nikkei.
The Japanese automaker is in the final stages of negotiations with its Chinese joint venture partner, Guangzhou Automobile Group Co., to discontinue manufacturing operations. The source of this information was not disclosed in the report.
A spokesperson from Mitsubishi Motors, in a statement to Bloomberg News, mentioned that the company is in discussions about future plans among shareholders and that nothing has been finalized at this stage.
GAC Mitsubishi Motors Co., the joint venture, currently operates a factory in Hunan province, southern China. Earlier this year, Mitsubishi Motors announced an indefinite suspension of its business in China and planned staff layoffs. A memo circulated on Chinese social media on July 12 indicated that sales had fallen considerably below expectations in a market that is swiftly transitioning to electric vehicles.
Mitsubishi’s challenges in China mirror the struggles faced by other Japanese car manufacturers who have been relatively slow in introducing electric vehicles (EVs) and have lost market share to formidable competitors such as Tesla Inc. and BYD Co.
Both Honda Motor Co. and Nissan Motor Co. have experienced declining sales in China, the world’s largest automobile market, for at least two years. Toyota Motor Corp. also saw a drop in deliveries last year for the first time in a decade.
Mitsubishi Motors CEO Takao Kato stated in May that it was evident the company needed to reassess its strategy in China.
Chinese consumers have embraced EVs with enthusiasm, with one in every four cars sold in the country in the previous year being electric. While Japanese carmakers have pledged to introduce more EVs, they face a challenging battle to catch up with market leaders like Tesla and BYD, as well as a multitude of competitors, including Chinese manufacturers such as Nio Inc. and Xpeng Inc.
In 2022, Mitsubishi Motors sold just 515 of its electric Airtrek sport-utility vehicles in China. Its overall production in the country plummeted to 1,530 cars in January, ultimately ceasing operations.
In March, the company announced plans to invest up to ¥1.8 trillion (approximately $12 billion) in electrification by 2030. Mitsubishi Motors’ shares have seen a rise of around 20% in Tokyo since the beginning of April.
By Bloomberg
