As Mitsubishi Exits China, Other Japanese Automakers Consider Following Suit

Japanese companies, traditionally strong in gas-fueled cars, are falling behind in the fast-paced EV sector led by Chinese firms.

Mitsubishi is officially out of China's auto market, and other Japanese automakers may follow suit.

MarkLines conducted a research study

Nikkei This Week cites

This year, Japanese automakers such as Toyota Honda and Nissan have been lagging behind in the Chinese market. The combined sales of the three manufacturers in the first quarters 2023 were 1,29 million new vehicles, which is a decrease of 26% on an annual basis. Toyota and Nissan both saw declines around 30%.

Japanese automakers are challenged by the rise of China's EV market and the dominance local brands such as BYD Motor and Great Wall Motor. Last year, electric vehicle sales in China increased by 80% to 5,36 million units. This represents about 20% of China's new car market.

The Japanese auto industry, which has traditionally been strong in gas-powered cars, is falling behind the Chinese companies in the rapidly-growing EV sector.

Faced with challenges, Japanese automakers reorganize their Chinese operations. Mazda will cut its dealership network from the levels of 2022 by around 10%, while Toyota terminated contracts with roughly 1,000 employees at a joint-venture.

Nissan has reportedly reduced its output by half. Honda also cut back on local production. According to current sales projections, Toyota, Nissan and Honda all have an excess of 40% in China.

Nikkei is a Japanese newspaper.

As of October 19, the market share of Japanese automakers in the Association of Southeast Asian Nations fell four percentage points compared to 2019.

MarkLines, and other data sources."

Mitsubishi expects to lose 162 million dollars ($24 billion) from its exit in the fiscal year that ends March next.


We noted this weeks ago

Mitsubishi is quitting China. A September report stated that the company was suffering from "sluggish" sales. It also noted that other Japanese automakers were also reevaluating their viability in China.

GAC Mitsubishi Motors closed its manufacturing operations in Hunan Province indefinitely at the end of September. This marked the end for Mitsubishi's only factory in China. GAC, who holds a 50% stake in the joint-venture, intends to convert the Hunan plant into an electric vehicle (EV), while still retaining some of its employees, according to the report.

We wrote that Mitsubishi Motors, Mitsubishi Corp. and GAC Mitsubishi, which own 30% and 20% respectively, will pull their investments. GAC Mitsubishi, however, will continue to be a business entity.



Mitsubishi's sales in China will plummet by 60% in 2022 to 38,550 cars. The launch of the hybrid Outlander last autumn did not meet the expectations. Mitsubishi plans to reallocate its resources to Southeast Asia, Oceania and other regions that account for one-third or more of the company's total sales.

The electric vehicle market is growing in China. A report by the China Association of Automobile Manufacturers indicates that EV sales will increase 80% in 2022, to 5,36 million units. Mitsubishi has been behind in this segment and relies on GAC to supply EVs in China.