Japan’s Mitsubishi Motors has decided to exit the Chinese market as local Chinese car brands dominate the scene, tarnishing the reputation of automobile powerhouses like Germany and Japan.
According to a report by Japan’s NHK Broadcasting on Oct. 19, sources have indicated that Mitsubishi Motors has decided to halt vehicle sales and production in China.
Since forming a joint venture with Guangzhou Automobile Group (GAC) in 2012, Mitsubishi suspended operations at its Hunan Province factory last March. The company plans to dissolve the joint venture and cease new car sales once the current inventory is depleted, with a subsequent focus on the Southeast Asian market.
NHK analyzed that the reason for Mitsubishi’s exit from the Chinese market was a delayed transition from a combustion engine-centric lineup to eco-friendly vehicles. As of last August, eco-friendly vehicles occupied a record 32.8% of the Chinese auto market.
The domestic car market in China is quickly being reorganized around local brands spearheading electric vehicles. According to the China Association of Automobile Manufacturers (CAAM), from January to August this year, the sales volume of local brands reached 8.48 million units, a 21.2% increase from the same period last year. Market share for these local brands has increased from 47.7% to 54.2%, a rise of 6.5 percentage points.
In contrast, market shares for Japan and Germany have been on a decline each year since 2020, currently standing at 14.5% and 18.7% respectively. Notably, from January to August, sales volumes for Japan’s three major automakers - Toyota, Honda, and Nissan - all saw a decrease compared to the previous year. Volkswagen, after holding the number one spot in the Chinese auto market for the past 15 years, was overtaken by BYD earlier this year.
NHK commented, “Focusing primarily on combustion engine vehicles, Mitsubishi Motors faced challenges in the Chinese market where electric and hybrid vehicles are gaining traction.” They further reported that other Japanese automakers are also feeling the sales slump and are reconsidering their strategies in China.