Mitsubishi Motors has an uphill journey in China

Posted on 7 Aug 2008 by The Manufacturer

They might have endorsement from Jackie Chan but George Gao wonders whether Mitsubishi's latest affront on China's ever-more lucrative automotive market will finally see them take control of the fight... Read the first installment of our 'Update from China', provided by the Shanghai-based Gasgoo Global Automotive Sources.

Japanese carmaker Mitsubishi Motors and China’s Southeast Motors based in the southeastern province of Fujian jointly held a press conference in Shanghai earlier this year, announcing that Hong Kong superstar Jacky Chan endorsed the partnership of the two auto manufacturers. The legendary action movie star has been the brand image ambassador of Mitsubishi Motors and this is viewed as one of the most successful achievements that the Japanese auto maker has made in China these years. But so far the growth of Mitsubishi Motors in the world’s most populous country has left much to be desired, far from matching up to the global appeal and popularity of Jacky Chan.

The first “made-in-China” vehicle model carrying the Mitsubishi brand name is the Mitsubishi Pajero Sport, which rolled off the assembly line in Beijing Jeep Corp (now Beijing Benz-DaimlerChrysler Auto) on March 14, 2003. At that time, DaimlerChrysler was the biggest shareholder of Mitsubishi Motors. Although Mitsubishi had no direct holdings in Beijing Jeep, Pajero Sport vehicles were produced by the Beijing car-maker through the technical transfer from DaimlerChrysler. Following the roll-out of this model in Beijing, Mitsubishi Motors began to speed up its entry into the Chinese market, and one week later, on March 21, 2003, the Southeast Motors released (without using the Mitsubishi brand) its Lioncer model, which was fashioned after the Lancer vehicle of Mitsubishi Motors. Based on its relation (or association) to the Mitsubishi model, the Lioncer vehicles were well received by Chinese enthusiasts of sport cars immediately after its release.

On January 19, 2004, Outlander, Mitsubishi’s most important City SUV, landed on mainland China to be locally produced by Beijing Jeep. On June 23, 2004, Southeast Motors began to produce Mitsubishi’s MPV model Grandi vehicles, and they have been named New Space Wagon in the Chinese market. In 2003 and 2004, Mitsubishi Motors achieved its greatest glory in China.

But unfortunately the glorious days didn’t last long. After DaimlerChrysler sold its Mitsubishi shares (12.42%), the two auto makers drew the line in their holdings relation. Their split greatly affected the making and sales of Mitsubishi vehicles in the Chinese market, because the major investment and production plan were both centered in Beijing Jeep. When Mitsubishi’s Pajero Sport and Outlander vehicles were made in Beijing, no joint venture agreement was reached, and the two models were only produced through technical transfer. At the end of 2005, Beijing Jeep was renamed Beijing Benz-DaimlerChrysler Auto to shift its focus onto the production of sedans and all-terrain vehicles in partnership with German Benz and American Chrysler.

After it lost the chance to forge a joint venture with the highly competitive partner Beijing Automotive Industry Holding Corp (Beiqi), Mitsubishi Motors sought to cooperate with Southeast Motors. On April 12, 2006, Fujian Motor, Taiwan’s China Motor Corp., and Mitsubishi Motors announced their partnership (with Fujian Motor holding 50% of the shares and Mitsubishi holding 29.5%). This landmark deal is considered the beginning of Mitsubishi Motors’ comeback and recovery in mainland China’s auto industry.

Now, with Chan’s backing, can they finally fight their way to the forefront of the growing Chinese automotive market? We wait with bated breath…

By George Gao

Article originally posted on gasgoo.comhere.

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