GAC Aion reportedly to take over Mitsubishi's plant as Japanese carmaker exiting China

The plant, which has an annual capacity of 200,000 vehicles, has already begun equipment renovation and is expected to begin production in May 2024, according to local media.

(Image credit: CnEVPost)

GAC Aion, the electric vehicle (EV) subsidiary of GAC Group, will take over Mitsubishi's plant and some of its employees in China, as the Japanese carmaker is exiting the world's largest auto market.

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Negotiations between the three shareholders of Mitsubishi's Chinese joint venture GAC Mitsubishi are nearing completion, with a final proposal for Mitsubishi's exit from the Chinese market to be announced by the end of this month, local media outlet Tencent News said in a report today.

GAC Mitsubishi's 200,000-vehicle-a-year plant in Changsha, Hunan province, will be taken over by GAC Aion, which has already begun equipment renovation and is expected to start production in May 2024, the report said, citing a person familiar with the matter.

Starting in November, more than 1,100 employees at the GAC Mitsubishi plant will sign labor contracts with GAC Aion and will be officially transferred to the company, according to the report.

The Changsha plant has nearly 3,000 employees, and those signing contracts with GAC Aion will see a significant drop in pay, the report said.

GAC Mitsubishi was established in May 2012 by GAC Group, Mitsubishi Motors Corporation and Mitsubishi Corporation.

The joint venture has seen a decline in sales over the past few years, with just 12,000 units in the first half of this year, well below 2018's 144,000 units.

Employees at GAC Mitsubishi's Changsha plant worked just over 100 days a year from 2019 to 2022, Tencent News quoted employees at the plant as saying.

Earlier this year, GAC Mitsubishi began disposing of its inventory of vehicles, eventually packaging and selling all of them at a 60 percent discount, the report noted.

GAC Mitsubishi had tried to compete two years ago by launching EV models amid the rapid growth of China's electric vehicle (EV) industry.

In August 2021, a regulatory filing revealed that GAC Mitsubishi would launch its first EV in China, the Airtrek, which is based on the Aion V model.

GAC Mitsubishi's fate mirrors the challenges faced by Japanese automakers in China, where they have lagged significantly behind in the country's rapid auto industry transition to EVs, leading to a steady decline in market share.

In September, Japanese carmakers' share in China fell to 16.67 percent, down from 19.30 percent in January 2022 and 21.56 percent in January 2021, according to the China Passenger Car Association (CPCA).