Mitsubishi Motors announced recently the termination of its joint venture partnership with Shenyang Aerospace Mitsubishi, marking its complete withdrawal from the Chinese automotive market. This move follows Suzuki’s earlier decision to exit the Chinese market, making Mitsubishi another Japanese carmaker to fully pull out.
On Tuesday, July 22nd, Mitsubishi Motors declared the discontinuation of its joint venture cooperation with Shenyang Aerospace Mitsubishi Automotive Engine Manufacturing Co., Ltd., as well as the operation of the joint venture company’s engine business. This signifies Mitsubishi Motors’ complete withdrawal from automotive production activities in China. Mitsubishi Motors stated that with the rapid shift towards electric vehicles in the Chinese automotive industry, they needed to reassess their strategy in China and hence decided to exit the joint venture.
The signs of Mitsubishi’s withdrawal had been evident earlier. According to Dahe Daily, on July 2nd, the original Shenyang Aerospace Mitsubishi Automotive Engine Manufacturing Co., Ltd. quietly changed its name to “Shenyang Guoqing Power Technology Co., Ltd.” Business registration information shows that Mitsubishi Motors Corporation and other old shareholders had silently exited, with Beijing Saicmore Technology Co., Ltd. taking over.
According to the data from the China Passenger Car Association, the domestic retail penetration rate of new energy vehicles reached 53.3% in June this year, further eroding the market share of fuel-powered vehicles. Su Bo, former vice minister of the Ministry of Industry and Information Technology, stated at the “China Auto Chongqing Forum” in June that the sales volume and profitability of fuel-powered vehicles have significantly declined, resulting in a massive surplus in production capacity, posing a major crisis for enterprises.
Mitsubishi Motors began its operations in China in the 1970s, primarily supplying engines to domestic car manufacturers through its two joint venture engine manufacturing companies, Shenyang Aerospace Mitsubishi and Dongfeng Mitsubishi. Companies such as BYD, Hafei Saima, Zotye Auto, and Beiqi Foton had been customers of Dongfeng Mitsubishi.
As the penetration rate of new energy vehicles in China continues to rise steadily, Mitsubishi Motors has started to gradually withdraw from the Chinese market. In 2021, Mitsubishi Motors exited from two joint ventures in China, with the withdrawal from Dongfeng Mitsubishi, operational for over twenty years, handed over to Chang’an Automobile in January; and the exit from Soueast (Fujian) Motors in May, now managed by Fuzhou Traffic Construction Investment Group Co., Ltd. Especially in March 2023, Mitsubishi Motors withdrew from its most important joint venture car plant in China, GAC Mitsubishi.
Currently, Mitsubishi Motors has exited all engine joint ventures and car joint ventures in China, indicating the conclusion of its over fifty years of business in China.
Prior to Mitsubishi Motors, Japanese Suzuki had already left the Chinese market to focus on other regional markets like India.
Additionally, Honda and Nissan have closed some of their fuel-powered car factories. In July 2024, Honda announced plans to cut approximately 290,000 units of annual gasoline car production in China, with joint venture factories with GAC Group and Dongfeng Corporation set to halt operation in October and November.
According to Yomiuri Shimbun in Japan’s April report this year, Nissan plans to cease car production operations at its Wuhan plant within the fiscal year 2025 (ending on March 31, 2026).
Not only Japanese carmakers but also German and American automotive companies have begun to downsize their operations in China. On July 11th this year, a Volkswagen spokesperson stated in a release: “We can confirm that production has been halted at SAIC Volkswagen’s Nanjing plant.” In February this year, SAIC-GM closed the Beisheng plant in Shenyang, Liaoning Province.
With the shifting landscape of the global automotive industry, the evolving market demands and regulatory environment have prompted various car manufacturers to reconsider their presence in specific regions, leading to strategic adjustments and realignments in their businesses worldwide.