Mitsubishi Motors 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 petrol cars to cleaner vehicles had hit its existing lineup 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 confirmed the contents of the memo. Both automakers said that all stakeholders were working to “optimise 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 and BYD, Honda Motor and Nissan Motor 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 after 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 $13 billion on electrification by 2030, showing efforts to catch up with global automakers’ shift to greener vehicles.
