What Led Mitsubishi to Leave China After Almost Thirty Years | Carscoops

      A struggling Japanese automaker severed its final connections with China due to tariffs and declining demand impacting its profit projections.

      Mitsubishi has fully withdrawn from China following the conclusion of its engine joint venture and a previous suspension of production by GAC.

      The company's profits fell by 84 percent in the first quarter due to decreased sales and tariff penalties.

      The tariffs have cost Mitsubishi 14.4 billion yen, resulting in a significant decrease in its operating earnings.

      A challenging beginning to 2025 has increased pressure on Mitsubishi, as it announces a dramatic decline in profits and the crucial decision to completely exit the Chinese market. After halting vehicle production in China in 2023, Mitsubishi has confirmed its full withdrawal, ending decades of operations in a nation where local automakers have advanced rapidly, particularly with the rising demand for new-energy vehicles.

      Earlier this month, Mitsubishi disclosed the termination of its joint venture with Shenyang Aerospace Mit. Engine. Mfg. Ltd., which had been engaged in manufacturing engines for Mitsubishi-branded vehicles and several Chinese brands. This partnership, established in 1998, is now rebranded following Mitsubishi's departure.

      The Japanese automaker stated that its exit is due to the "rapid transformation" occurring within China's automotive industry.

      Mitsubishi began its car production in China through a collaboration with GAC in 2012. At its height, this partnership achieved annual sales of 144,000 units, with the Outlander recognized as a notable model. However, by 2023, Mitsubishi had already stepped back from the GAC joint venture, indicating the impending end of its strategy in China.

      The announcement of Mitsubishi's exit follows a reported 84 percent annual decrease in its first-quarter operating profit. Tariffs introduced during President Donald Trump's administration have resulted in a loss of approximately 14.4 billion yen (~$97 million) for the automaker, with its quarterly operating profit decreasing to just 5.6 billion yen or $35.5 million, according to Nikkei Asia.

      Southeast Asia remains Mitsubishi's most significant market, though sales there also fell by 8.5 percent, totaling 54,000 vehicles in the first quarter. North America contributed 22 percent to overall sales, with a 5 percent increase from the previous year. This growth, however, was driven by rising demand in Mexico and Canada rather than the US market.

      Recently, the United States and Japan came to a new trade agreement to reduce tariffs from 25 percent to 15 percent. While this may benefit Mitsubishi, the company has not yet revised its earnings forecast for the fiscal year ending in March 2026.