Mitsubishi Motors Corp., one of Japan’s leading automakers, has decided to withdraw from automobile production in China, according to multiple sources. The company has started final withdrawal talks with China’s Guangzhou Automobile Group (GAC), a major automaker with which Mitsubishi has a joint venture.
Mitsubishi’s Struggle in China
Mitsubishi Motors has been struggling in the Chinese market for years, facing stiff competition from local and foreign brands, especially in the electric vehicle (EV) segment. The company’s sales in China have been declining since 2021, and it only sold 515 of its electric Airtrek sport-utility vehicles in 2022. In July 2023, the company announced that it had halted its China business indefinitely and was going to lay off staff. A company memo that was circulated on Chinese social media said sales had fallen far below expectations in a market rapidly shifting to EVs.
Mitsubishi Motors’ CEO Takao Kato said in May that it was clear the company needed to revisit its strategy in China. He also said that the company would focus on Southeast Asia, where it has a strong presence and growth potential.
Impact of Mitsubishi’s Withdrawal
Mitsubishi Motors’ withdrawal from China will have a significant impact on its global operations and reputation. China is the world’s largest car market, accounting for about 30% of global sales. By exiting China, Mitsubishi Motors will lose access to a huge customer base and potential revenue. It will also face challenges in developing and launching new models and technologies, as China is a key hub for innovation and research in the automotive industry.
Mitsubishi Motors’ withdrawal will also affect its Chinese partner GAC, which owns 50% of the joint venture GAC Mitsubishi Motors Co. GAC will have to find a new partner or take over the venture’s assets and liabilities. GAC is one of China’s leading automakers, with partnerships with other foreign brands such as Toyota, Honda, and Fiat Chrysler. It is unclear how GAC will cope with the loss of Mitsubishi Motors as a partner and competitor.
Implications for Other Japanese Carmakers
Mitsubishi Motors’ withdrawal from China may also have implications for other Japanese carmakers, which have been losing market share to newer competitors like Tesla and BYD. Honda and Nissan have seen their sales in China fall for at least two years, while Toyota’s deliveries last year declined for the first time in a decade. Japanese carmakers have been slow to offer EVs in China, where one in every four cars sold last year was electric. They have also faced political and diplomatic tensions between Japan and China, which have affected consumer sentiment and demand.
Japanese carmakers will have to rethink their strategies and investments in China, as the market becomes more competitive and dynamic. They will have to offer more attractive and innovative products and services, especially in the EV segment, to regain customer loyalty and trust. They will also have to strengthen their partnerships and collaborations with local players, such as suppliers, dealers, and regulators, to adapt to the changing market conditions and regulations.