Why Mitsubishi has no option but to exit China, the world's largest car market

Mitsubishi has reportedly decided to stop manufacturing its cars owing to weak demand in what is the world's largest vehicle market. Established as GAC Mitsubishi Motors in 2012, the company has struggled to fend off some very fierce competition from both global as well as local manufacturers in the country.

According to a report in Nikkei Asia, Mitsubishi now wants to pull out of a partnership with Guangzhou Automobile Group with which it had a joint venture since 2012. While GAC is the majority partner with 50 per cent stake, Mitsubishi has a 20 per cent stake and the remaining is with trading house Mitsubishi Corp. The company fared reasonably strong till 2018 when it sold around 1.40 lakh units in the market. But the subsequent years have been unkind with barely 38,000 deliveries in all of 2022.

While production at the solitary China facility was already halted in March this year, it is reported that Mitsubishi has no plans of resuming work here. The plant itself, it is further highlighted, will continue to remain a base for GAC from where it plans to manufacture electric vehicles or EVs.

Mitsubishi now plans to pull out its investments which could be redirected towards efforts in the Oceania region. The company also plans to increase its focus on more fertile markets like South Asia, Latin America, West Asia and Africa.