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Mitsubishi Motors Suspends China Business After Sluggish Sales, Japanese automakers have struggled in China with lack of EVs

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Mitsubishi Motors Suspends China Business After Sluggish Sales, Japanese automakers have struggled in China with lack of EVs​

  • Sales have been falling in a market rapidly going electric
  • Japanese automakers have struggled in China with lack of EVs

By Linda Lew
July 14, 2023 at 12:01 AM EDT

(Bloomberg) -- Mitsubishi Motors Corp. has suspended its China business indefinitely and will lay off staff after years of poor sales in a market rapidly turning to electric vehicles.

The Japanese automaker said that China’s transition away from gasoline cars to cleaner vehicles had hit its existing line up and seen sales fall far below expectations, according to a July 12 company memo that was circulated on Chinese social media.

“In the past few months, management and shareholders have tried to the best of our ability, but due to market conditions and with great reluctance and regret, we must seize the opportunity to transition to new energy vehicles. The company will resurrect after going through trials and tribulations,” the memo said.

A representative from Mitsubishi’s local partner Guangzhou Automobile Group Co. confirmed the contents of the memo. Both automakers said that all stakeholders were working to “optimize the employee structure” and will try their best to guarantee the legal rights of affected staff.

Mitsubishi’s failure in China reflects the pressure facing fellow Japanese carmakers, who have been slow to offer electric models and lost market share to new competitors like Tesla Inc. and BYD Co. Honda Motor Co. and Nissan Motor Co. sales in China have been falling for at least two years while Toyota Motor Corp.’s deliveries last year declined for the first time in a decade.

The decision to shutter Mitsubishi’s China operations comes production at the Changsha plant in Hunan province was suspended in March. Chief Executive Officer Takao Kato said in May the company would try to overcome difficulties in China in response to speculation the carmaker would exist the market.

Mitsubishi saw its annual China sales peak in 2019 at around 134,500. The company produced 34,575 vehicles in the country in 2022, a rate that dwindled to 1,530 in January and then to zero in April. Mitsubishi has one electric SUV in China, the Airtrek, which only sold 515 units last year.

Mitsubishi in March announced plans to electrify 100% of the cars it sells worldwide by fiscal 2035 and invest as much as ¥1.8 trillion ($13 billion) on electrification by 2030, showing efforts to catch up with global automakers’ shift to greener vehicles.

Mitsubishi's sales in China peaked in 2018, when it recorded sales of over 141,000 vehicles, according to industry data. In 2022, sales had dropped below 33,000 vehicles.

Other foreign automakers are also under pressure to restructure and cut costs, limiting their exposure to China, or roll out new models that can compete on features and price with Chinese EV brands, analysts have said.

Hyundai Motor, the third-largest automaker by sales, said last month it would close another plant in China this year and focus its efforts in China on higher-end models, including SUVs and its Genesis-brand vehicles.

 
Other foreign automakers are also under pressure to restructure and cut costs, limiting their exposure to China, or roll out new models that can compete on features and price with Chinese EV brands, analysts have said.

Yes, that is actually what Mitsubishi should do.

But I think Japanese companies will never able to do so.

Whatever Japanese company is trying to keep selling expensive car or to add more features, it will bankrupt in the end.

Several decades later, Japan will become a mediocre country, unlike Japan in '80 and '90.
 
Yes, that is actually what Mitsubishi should do.

But I think Japanese companies will never able to do so.

Whatever Japanese company is trying to keep selling expensive car or to add more features, it will bankrupt in the end.

Several decades later, Japan will become a mediocre country, unlike Japan in '80 and '90.
Mitsubishi, Suzuki and other small car brands have been unpopular with Chinese customers from the beginning. Chinese people like big things, heavy things, sturdy things.
Why did Audi launch China-specific A8L and A6L? And why is the BMW 3 Series selling so well in China?
Japanese companies should learn from the Germans how to respect the aesthetics of customers.
 
I think Suzuki should also suspends business from every country.
3rd class quality metal,
no balance in vehicles, accident happening in Pakistan, when driver try to turn vehicle or increase little speed on straight road, even while braking.

 
Mitsubishi is a failure in every country.
Well, ever since NISSAN took 1/3rd of the stake it's been in that state as you mentioned.

To think they never introduced their workhorse sedan (Lancer) - automatically putting an end to they Super Rally domination beast - EVO (Evolution Series).

But, all before that happened - Mitsubishi Motors were never the ones to change. Their Pajero 4x4 hasn't really had a major overhaul in what...25 Years.

If you set foot in a Mitsubishi dealership in the Middle East, it feels like you traveled back in time. And that's saying a lot.

On the flipside, I'm truly amazed at the designs the Chinese Automakers are pumping out these days. Sales of Japanese & Korean brands are shifting towards brands like JAC, Geely, Haval, G (GAC) - just to name a few.
 
Well, ever since NISSAN took 1/3rd of the stake it's been in that state as you mentioned.

To think they never introduced their workhorse sedan (Lancer) - automatically putting an end to they Super Rally domination beast - EVO (Evolution Series).

But, all before that happened - Mitsubishi Motors were never the ones to change. Their Pajero 4x4 hasn't really had a major overhaul in what...25 Years.

If you set foot in a Mitsubishi dealership in the Middle East, it feels like you traveled back in time. And that's saying a lot.

On the flipside, I'm truly amazed at the designs the Chinese Automakers are pumping out these days. Sales of Japanese & Korean brands are shifting towards brands like JAC, Geely, Haval, G (GAC) - just to name a few.
Ironic how mitsu was the first player which introduced SUV culture in Pak (90s), nobody knew bout Land cruisers except govt officials or mil. While Pajero was the suv that even made it to shazia khushk songs lol.

Yeah evos are still selling but that's bout it.

the diff between german car vs japan car the handling.
Yeah but japanese are cheaper and offer reliability which Germans can't.. also parts are much cheaper and more readily available.

Even our fuel isn't on par with euro standard.
 

Mazda says needs China strategy overhaul to catch up with market​


Mazda says needs China strategy overhaul to catch up with market

Mazda says needs China strategy overhaul to catch up with market
14 July,2023 05:00 pm

TOKYO (Reuters) - Japan's Mazda Motor (7261.T) needs to overhaul its strategy in China, the world's biggest auto market, where it faces increasingly tough competition from domestic players, the automaker's chief executive said on Friday.

CEO Masahiro Moro said business conditions for Mazda in China, where it has a joint venture with Chongqing Changan Automobile (000625.SZ) and China FAW, would become increasingly tough over the coming year to 18 months.

Moro said it was not planning to "scale back", although the company was planning to cut fixed costs.

"Production output will be low for the time being while pressure on profits is increasing," Moro told reporters at a roundtable meeting.
"The important thing is to turn the tide and introduce electric vehicles one by one," he said.

During a visit to Mazda's China unit last month, Moro said he discussed with the joint venture's management efforts to catch up with the high speed of electrification.

Mazda is a small player in China, where its best-seller is the Mazda 3, according to the industry data, which also showed it trailed EV startups NIO and Xpeng in the country in 2022.

Overall, Mazda's sales in China in 2022 were down 41% from the prior year to just over 108,000 vehicles, according to company data.
Its sales in China peaked in 2016 at just over 316,000 vehicles, separate industry data showed.

Mazda is not alone in finding the Chinese market increasingly tough.

Mitsubishi Motors' (7211.T) local joint venture with Guangzhou Automobile Group (601238.SS) on Thursday said it would cut staff costs after a decline in sales of its Outlander sport utility vehicle.

Looking beyond China, Moro said if Mazda were to begin EV production in North America, it would happen after 2027, which marks the end of the middle phase of its business plan for this decade.

He also said Mazda did not plan to make EVs at a plant it built with Toyota Motor in Huntsville, Alabama, where it is making Mazda CX-50 crossovers.

 
Japanese car bands are lagging in terms of EV technology.
 
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