Mitsubishi Motors to Cease Production in China

Mitsubishi Motors will cease vehicle production in China, signaling another instance of foreign automakers retreating from the largest car market in the world.

After much speculation, the Japanese car manufacturer officially announced on Tuesday that it will cease local manufacturing operations and withdraw from a longstanding joint venture in mainland China. In a statement, the company revealed its decision to significantly revamp its strategy in response to the fiercely competitive market and declining sales.

"The transition to electric vehicles is outpacing initial predictions, and customers are swiftly making noteworthy shifts in their preferences for brands and vehicle segments," Mitsubishi stated.

BYD electric cars, captured in this September 11, 2023 photo, are neatly arranged in stacks at the international container terminal of Taicang Port, located in Suzhou Port, in China's Jiangsu Province.

The world needs cheap electric cars. That spells trouble for big carmakers

The company had suffered a decline in sales due to these shifts over the last two to three years, it added.

"We attempted to regain our sales volume by introducing a new model in December 2022. However, we have not been able to meet our goals and as a result, we temporarily halted production since March of this year to make necessary inventory adjustments," the statement explained.

As part of its business restructuring, Mitsubishi will transfer its ownership share in its Chinese joint venture to its current partner, Guangzhou Automobile Group Company (GAC). GAC will utilize the production facility exclusively for the manufacturing of electric vehicles. Following the sale, GAC will become the sole proprietor of the unit, established in 2012.

Mitsubishi anticipates a financial loss of 24.3 billion yen (equivalent to around $162.2 million) for the fiscal year concluding in March 2024 due to the restructuring measures implemented. There has been no immediate response from the company regarding inquiries about their future plans to sell imported cars in the country.

Logos for Renault, left, and Geely, right.

Reuters & NurPhoto via Getty Images

Renault and China's Geely will invest up to $7.7 billion to build hybrid and gas engines

A few days later, Stellantis, which houses renowned brands like Jeep and Chrysler, took additional steps to distance itself from China.

According to a stock exchange filing by Dongfeng, last week, the company made the decision to sell important assets that it had previously shared with its Chinese partner, Dongfeng Motor Group.

The Chinese automaker will acquire the land use rights and buildings in Wuhan and Xiangyang, previously utilized for the production of Peugeot and Citroën vehicles, as part of the agreement. The transaction is valued at approximately 1.7 billion yuan ($232.5 million).

Stellantis is undertaking a wider transition by adopting an asset-light strategy in China. This involves the termination of its joint venture in the country, a decision that took many by surprise. Interestingly, Stellantis had previously attempted to increase its ownership in the business, despite the CEO highlighting concerns related to increasing "political influence."

Later, in October 2022, that joint venture filed for bankruptcy.

Stellantis continues to sell imported vehicles in China through dealerships.

Mitsubishi has already outlined its intentions to increase investments in other regions. In a separate announcement on Tuesday, the company revealed its support for Ampere, an electric vehicle division established by French automaker Renault. Mitsubishi will allocate up to €200 million ($212 million) to Ampere, aiding its expansion efforts in the European market.