Mitsubishi Motors in Japan May Reverse Plan to Withdraw from European Market

Mitsubishi Board Meeting on 25th to Discuss Production Plan at Renault Plant in France

[Image source= Reuters Yonhap News]

[Asia Economy Reporter Byunghee Park] The Financial Times (FT) reported on the 23rd (local time) that Mitsubishi Motors of Japan may reverse its decision to withdraw from the European market announced last July.

According to the FT, Mitsubishi Motors, along with its alliance partners Renault of France and Nissan Motors of Japan, has reached a new agreement to continue maintaining their alliance. The three companies reached the agreement on the 22nd, and Mitsubishi Motors plans to discuss the agreement at its board meeting on the 25th.

The agreement includes a plan to produce Mitsubishi Motors vehicles at Renault's factory in France. If Mitsubishi's board accepts the agreement, Mitsubishi will partially reverse its decision to withdraw from the European market announced last July, the FT explained.

Mitsubishi owns a factory in the Netherlands capable of producing 200,000 cars annually. However, in 2019, Mitsubishi's European car sales amounted to only 120,000 units, with a market share below 1%. Sales slumped further last year due to the COVID-19 pandemic, leading Mitsubishi to announce its withdrawal from the European market in July last year. It stated that it would no longer launch new cars in Europe and would cease production. Accordingly, Mitsubishi was expected to stop car production in Europe as early as this year.

However, amid the crisis, Mitsubishi has prepared a new plan together with Renault and Nissan, creating room to continue production in Europe.

Renault acquired a stake in Nissan in 1999 when Nissan was facing management difficulties, and since then, the two companies have maintained a loose alliance while operating independently. In 2016, when Mitsubishi Motors faced a crisis due to fuel economy manipulation revelations, Nissan invested in Mitsubishi, establishing a three-company alliance system.

Currently, Renault holds a 43% stake in Nissan, Nissan owns 34% of Mitsubishi, and the French government holds a 15% stake in Renault. Renault was privatized in 1996 after being maintained as a French state-owned enterprise.

By producing Mitsubishi Motors vehicles at its French factory, Renault is expected to try to quell public criticism over large-scale layoffs. Renault announced a plan to cut 14,600 jobs last June, including 4,600 layoffs in France. This sparked a wave of criticism in France over the layoffs.

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