Smaller intl brands rolling back presence in largest market

After producing vehicles in China for over a decade, Japan's Mitsubishi Motors has decided to end its joint venture with local partner GAC because of lackluster performance against fierce competition in the world's largest vehicle market.

Last week, Mitsubishi said it will stop vehicle production at its joint venture, which was established in 2012, and transfer its stake in the unit to GAC, becoming the latest foreign automaker to cut back its operations in the world's top auto market.

Following a stake transfer, the joint venture will become a wholly owned subsidiary of GAC, the Japanese automaker said.

Analysts said the age is gone when international brands make easy money in China as the country is well into its e-mobility transition in which most of the major players are local companies.

GAC said the plant that was used to produce Mitsubishi vehicles will be used to manufacture electric vehicles bearing the Aion marque from June 2024, which will increase the popular brand's annual capacity to 600,000 units.

Mitsubishi is the latest foreign carmaker to retreat from China, the world's largest vehicle market.

Last year, Stellantis stopped production of its Jeep-branded vehicles at its Chinese joint venture, which the car group said "has been loss-making in recent years".

But the carmaker said the Jeep brand will continue to strengthen its product offering in China with an enhanced electrified lineup of imported vehicles.

This is part of a "light-asset "approach Stellantis has adopted due to its lackluster operations in the country.

Earlier this month, Stellantis sold plants of its joint venture, Dongfeng Peugeot and Citroen Automotive, in Wuhan and Xiangyang, both in Hubei province, back to its partner Dongfeng for 1.71 billion yuan ($233.69 million).

The joint venture pays Dongfeng for the use of the plants to produce Peugeot and Citroen cars that are seeing their sales dwindle in the country.

It has decided to increase exports, including shipping Peugeot 4008 and Peugeot 5008 models to ASEAN countries, and the Citroen C5X model to Europe.

Some other niche players have either picked up or are considering the same tactic, including Ford and Volkswagen's Czech subsidiary Skoda.

Earlier this month, Skoda CEO Klaus Zellmer said the company will not sell its new Kodiaq SUV in China.

Zellmer said he would not say whether the brand is leaving the Chinese market but confirmed that the second-generation Kodiaq will not be sold here.

"We are talking with our joint venture partner there, trying to define the future," Zellmer told Automotive News Europe. "It's too early to draw final conclusions. It's a work in progress," he added.

Jia Jianxu, president of SAIC Volkswagen, which produces Volkswagen, Audi and Skoda vehicles in China, confirmed that the company will not expand its Skoda dealership network in the country, and exporting China-made Skoda vehicles is under discussion.