POST-FORDISM

Mitsubishi forced out of China after competition from cheap rivals

James Warrington
Wed, 27 September 2023 

Mitsubishi Outlander PHEV

Mitsubishi has been forced to pull out of China amid tough competition from cut-price rivals.

The Japanese car giant is said to be in final withdrawal discussions with its Chinese partner Guangzhou Automobile Group (GAC) to end production in the country.

It comes after Mitsubishi said in July that it was suspending production in China indefinitely and would cut jobs amid a sharp drop in car sales.


The group has now decided not to resume operations at its factory in the Hunan province, Nikkei reported.

Mitsubishi’s sales in China have slumped in recent years amid growing demand for electric vehicles (EVs) and more affordable local brands such as BYD and Nio.

The Japanese company sold 38,550 cars in China in 2022, down 60pc on the previous year.

While the company released the hybrid Outlander SUV to the Chinese market late last year, this has failed to reverse the downward trend.

As part of the exit arrangement, Mitsubishi will withdraw its 50pc investment in the joint venture, which is held by the group’s trading house as well as its automotive company.

GAC is expected to maintain the venture as a corporate entity and use the Hunan factory for EV production.
New focus for the car giant

Mitsubishi will reportedly now focus on south-east Asia and Oceania, which account for around a third of its sales.

A spokesman for Mitsubishi said the company was currently discussing future plans with shareholders but insisted nothing had been finalised.

Mitsubishi began exporting cars to China in the 1970s and formed the joint venture with GAC in 2012. At its peak in 2018, the company sold 140,000 vehicles in the country.

But Mitsubishi is not the only Japanese carmaker to encounter difficulties in China after being slow to embrace EVs and coming up against tough local competition.

A price war across the EV sector, sparked by Elon Musk’s Tesla, has added to pressure on margins.

Honda and Nissan have both suffered falling sales in China over recent years, while Toyota’s sales fell last year for the first time in a decade.

Makoto Uchida, chief executive of Nissan, has admitted that the company is struggling to make a profit in China and said it was reviewing its operations in the country.