The decision to end car production in Europe could improve Mitsubishi’s operating profit by around JPY15bn (US$180m) a year due mainly to a fall in the sales incentives required to maintain output.
The carmaker is due to transfer all shares in subsidiary Netherlands Car BV, or NedCar, to local automaker VDL Groep within the next few days, completing the pullout. Mitsubishi will now import vehicles made in Japan and Thailand for sale in Europe.
NedCar, which employed 1,500 people, had capacity of around 200,000 units a year but, with sales falling across Europe, the plant lost its cost competitiveness for Mitsubishi.
The carmaker incurred operating losses on its European sales for two straight years to the end of March 2012 and faces further red ink in the current fiscal year. It has, however, boosted output in Thailand and Russia – where it has a JV with PSA in Kaluga – and such emerging markets are expected to account for 56% of its global production.