In the latest move by foreign automakers to retreat from the largest auto market in the world, Mitsubishi Motors has announced that it will no longer be producing cars in China.
The Japanese automaker officially announced on Tuesday that it would end local production and dissolve a long-running joint venture in mainland China, capping weeks of speculation.
The business announced in a statement that, in the midst of a decline in sales, it had made the decision to “fundamentally” restructure its approach to the highly competitive market.
“Consumers are rapidly undergoing significant changes in their brand and segment choices, and the shift to electric vehicles is accelerating faster than expected,” Mitsubishi stated.
These changes had resulted in a decrease in sales for the company over the previous two to three years, it added.
“By releasing a new model in December 2022, we tried to recover our sales volume. However, we continued to fall short of our plan, so we had to adjust our inventory and suspend our production since March of this year.”
Mitsubishi will now give its current partner, Guangzhou Automobile Group Company (GAC), a larger share in its Chinese joint venture as it restructures its business. GAC will still use the production site for electric vehicles. Established in 2012, GAC will be the only owner of the unit following the sale.
Mitsubishi stated that the reorganization would cause it to lose 24.3 billion yen, or roughly $162.2 million, for the fiscal year that ends in March 2024.
When asked if it would keep selling foreign vehicles in the nation, the company did not answer right away.
The action was taken a few days after Stellantis, the parent company of Jeep and Chrysler, also moved to further its withdrawal from China.
Dongfeng Motor Group, the company’s Chinese partner, announced in a stock exchange filing last week that the two had reached an agreement to sell important assets they jointly owned.
As per the agreement, the Chinese automobile manufacturer will assume ownership of buildings and land use rights in Wuhan and Xiangyang, China, which were previously devoted to the manufacturing of Peugeot and Citroën automobiles.
The estimated value of the sale is 1.7 billion yuan, or $232.5 million.
It is part of a larger change for Stellantis, which declared in July 2022 that it would close its joint venture in China and adopt a so-called “asset-light approach.”
The decision to dissolve the partnership came as a surprise because Stellantis had previously attempted to increase its ownership position in the company, despite the global automaker’s CEO making references to issues related to growing “political influence.”
That joint venture subsequently filed for bankruptcy in October 2022.
Stellantis is still using dealerships to sell foreign cars in China.
Mitsubishi has already announced plans to increase its overseas investment. Separately on Tuesday, the business declared its support for Ampere, a division of the French automaker Renault dedicated to electric vehicles.
The Japanese company is going to invest up to €200 million ($212 million) in Ampere in order to help it expand into the European market.