Mitsubishi Motors to End Production in China, Invest in Renault EV Unit (Update 1)

Reuters

17:08 JST, October 24, 2023 (updated at 20:05 JST)

TOKYO/PARIS, Oct 24 (Reuters) – Japan’s Mitsubishi Motors said it will end production of its cars at its joint venture in China and transfer its stake in the unit to its Chinese partner, becoming the latest foreign automaker to cut back its operations in the world’s top auto market.

The decision by the Japanese car maker comes amid fierce price competition in China which has led global automakers such as Hyundai Motor and Stellantis to take steps to bring down costs by restructuring their businesses.

Mitsubishi Motors separately said on Tuesday it will invest up to 200 million euros ($214 million) in the new electric vehicle unit of French counterpart Renault RENA.PA, as it seeks to strengthen its foothold in Europe and other markets.

The Japanese automaker established its JV in China with Guangzhou Automobile Group (GAC) and trading house Mitsubishi Corp in 2012.

Following a transfer of Mitsubishi Motors’ and Mitsubishi’s stake in the JV to their Chinese partner, it will become a wholly-owned subsidiary of GAC, the Japanese automaker said.

The JV plant will start producing GAC’s Aion cars from June 2024, which would help the EV brand to achieve a total annual capacity of 600,000 units by then, GAC said in a separate statement on the social media WeChat platform.

Mitsubishi Motors would book a special loss of 24.3 billion yen ($162.40 million) in the current financial year for restructuring in China. It did not make any change to its full-year earnings forecast.

Mitsubishi Motors said it is seeking to improve its EV development technology with its investment in Renault’s Ampere EV business, which the French automaker is looking to list on the stock market next year.

Renault Chairman Jean-Dominique Senard, speaking on the sidelines of an event in Paris, said he welcomed Mitsubishi’s investment and had always been confident the company would take part in Ampere.

“As a first step of this collaboration, Ampere will supply an EV on an OEM (original equipment manufacturer) basis in the European market,” Mitsubishi said in a statement.

Senard said he intends to talk in more detail with Mitsubishi during an upcoming trip to Japan.

The decision to invest in Ampere comes after Mitsubishi’s partners, Renault and Nissan Motor, finalized a restructured alliance in July.

Nissan has already committed to invest up to 600 million euros in the unit, consistent with it being a strategic investor and securing a board seat on the new company.