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CNN
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Mitsubishi Motors will stop producing vehicles in China, in the latest sign of retreat by foreign automakers in the world’s biggest car market.
Following weeks of speculation, the Japanese carmaker confirmed Tuesday that it would wind down local manufacturing and exit a long-running joint venture in mainland China.
In a statement, the company said it had decided to “fundamentally” shake up its strategy for the fiercely competitive market amid a slump in sales.
“The shift to electric vehicles is accelerating faster than expected, and consumers are rapidly undergoing significant changes in their brand and segment choices,” Mitsubishi said.
The company had suffered a decline in sales due to these shifts over the last two to three years, it added.
“We tried to recover our sales volume by releasing a new model in December 2022, but we continued to fall short of our plan and have suspended our production since March of this year in order to adjust our inventory,” it said.
Now, as it revamps its business, Mitsubishi will transfer its stake in its Chinese joint venture to existing partner Guangzhou Automobile Group Company (GAC), which will continue to use the production site for electric vehicles. After the sale, GAC will be the sole owner of the unit, which was set up in 2012.
Mitsubishi said it expected to incur a loss of 24.3 billion yen (approximately $162.2 million) for the fiscal year ended March 2024 as a result of the restructuring.
The company did not immediately respond to a request for comment on whether it would continue to sell imported cars in the country.
The move came days after Stellantis, home to brands such as Jeep and Chrysler, moved to withdraw further from China, too.
Last week, the company agreed to sell key assets it had jointly owned with its Chinese partner, Dongfeng Motor Group, Dongfeng said in a stock exchange filing.
Under the deal, the Chinese automaker will take over land use rights and buildings in the Chinese cities of Wuhan and Xiangyang that had previously been dedicated to the production of Peugeot and Citroën vehicles.
The sale is worth about 1.7 billion yuan ($232.5 million).
It fits into a broader shift for Stellantis, which announced in July 2022 that it would switch to a so-called “asset-light approach” in China, moving to terminate its joint venture in the country.
The decision to end that partnership was unexpected because Stellantis had previously tried to raise its stake in the business, even as the CEO of the global carmaker was alluding to problems linked to rising “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 made plans to step up investment elsewhere. Separately on Tuesday, the company announced its backing of Ampere, an electric vehicle unit set up by French automaker Renault.
The Japanese firm will pour up to €200 million ($212 million) into Ampere, helping it push further into the European market.