Mitsubishi Motors Repositions China Market

In the past when the Chinese market was once brilliant, the Japanese Mitsubishi Motors, which has become a niche player, was eager to return.

A few days ago, Mitsubishi Motors President Yoshitaka made it clear that Mitsubishi Motors has started a new business development plan since April of this year and the Chinese market will be positioned as the most important market for Mitsubishi.

As one of the earliest auto brands entering the Chinese market, Mitsubishi Motors needed a new development strategy in China. The joint venture agreement signed last year with the GAC Group not only satisfies Mitsubishi Motors’ desire to establish equity-equity joint ventures, but also becomes an important turning point for Mitsubishi Motors’s turnaround in China.

An industry source told the First Financial Daily that while Mitsubishi Motors has positioned China as the most important market, it also needs a clearer idea to integrate its resources in China and thus change its role in China’s niche. .

The most important market in China With more than 18 million units sold in the world last year, ranking the world's largest auto market, and in the global mature market inaction, Mitsubishi Motors finally positioned the Chinese market as the world's most important auto market.

In Mitsubishi Motors recently released its fiscal 2010 (April 2010 to March 2011) annual report, its operating profit was 40.3 billion yen, an increase of 189% compared to the same period of last year, and net profit was 15.6 billion yen, an increase of 225 %. This shows that it gradually emerged from the financial crisis in 2008.

However, Mitsubishi Motors is in a quagmire of operating losses in two globally mature markets in North America and Europe, with operating profit losses as high as 27.9 billion yen and 26.4 billion yen respectively. Compared with the previous fiscal year, the operating losses in the North American market have changed little, while the European market has turned from profit to loss.

Mitsubishi Motors said in its annual report that the sharp appreciation of the yen is the main reason for the operating losses in these two markets.

In addition, from a sales perspective, Mitsubishi Motors sold 1.105 million vehicles in fiscal 2010. Among them, the North American market is only 94,000 vehicles. Compared with other multinational brands, it has almost no competitive ability. It is even far behind the US sales of Subaru, Japan’s smallest auto company.

Yizi Xiu said that negotiations with GAC Group on the establishment of a new joint venture company began last year, and preparations for the production and sales of the new joint venture company are progressing smoothly.

Since the beginning of this year, GAC Changfeng has established the Cheetah Business Unit after the Mitsubishi Business Unit was established to prepare for the subsequent splitting of the brand. At the Shanghai Auto Show, General Manager Fu Shoujie of GAC Changfeng told reporters that Guangzhou Automobile's Mitsubishi Motors will base its Changsha base, and GAC Changfeng will base its base on Yongzhou.

Fu Shoujie said that the pre-planned production capacity of the Guangzhou Automobile Mitsubishi project is 300,000. The Pajero Sports, ASX, and global strategic small cars will be produced at Guangzhou Automobile Mitsubishi Motors. The first car will be rolled out next year.

Business Segment Integration Issues to Be Solved While Mashiko Sato expressed that China is positioned as the most important market and begins to develop a new strategy in China, how it integrates existing resources in China remains unknown.

Mitsubishi Motors has also had glory in the Chinese market. In 2003, its sales volume in the Chinese market reached 145,000, ranking first among Japanese brands, but it has been stalled since then. Yoshiko Yoshikazu blamed the cause of the backwardness of the Chinese market in 2010 on joint ventures that did not establish equity equities. In the joint venture agreement signed last year with the GAC Group, the two parties established a equity-equity joint venture based on GAC Changfeng.

At present, Mitsubishi’s business in China mainly consists of three major segments, namely, the domestically produced vehicle business, engine business, and imported vehicle business of the joint venture company. Yoshiko commented that in the future, Mitsubishi Motors will continue to promote the development of Mitsubishi Motors in China through its three core businesses: sales of Mitsubishi-made cars, sales of imported cars, and production and sales of engines.

However, it is to fully integrate these business segments to maximize their potential, or to maintain the existing situation. This will test the wisdom of Mitsubishi Motors and the importance attached to the Chinese market.

At the end of last year, there was news that Guangqi Group had reorganized Mitsubishi's engine joint venture Shenyang Aerospace Mitsubishi Engine in China, but this news has not been confirmed by GAC Group.

Mitsubishi Motors China (Imported Cars) Chairman Masayuki Ozawa told reporters at the Shanghai Auto Show that in the future, Mitsubishi imported car sales channels will remain independent and will not be merged with the channels of the joint venture company.

In addition, after the joint venture with Guangzhou Automobile Group, how to deal with the relationship with the Southeast Motor has also become the focus of industry attention. Currently, Southeast Motor has imported Mitsubishi models such as Wings, Lancer, Golan, and Junge, but the sales of these vehicles in 2010 were only 33,000.

Mitsubishi Motors holds a 25% stake in South East Automotive and a 50% stake in Guangqi Mitsubishi. The future tilt to GAC Mitsubishi may be unavoidable.