Mitsubishi Motors said it had suspended indefinitely production in China.

The company plans to cut staff as it faces challenges switching to EVs in the world’s largest car market, the Financial Times reported.

The decision came as foreign carmakers are facing increasing competition from domestic brands.

Mitsubishi said its joint venture (JV) with Guangzhou Automobile Group (GAC) would undergo a turnaround process. Shareholders would review management practices in China and optimise the workforce, emphasising the brand was not withdrawing.

GAC, in a statement, said shareholders were “trying their best to safeguard employees’ lawful rights and interests”. 

Production was halted last March, following poor sales of the new petrol Outlander SUV.

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By GlobalData

According to the China Passenger Car Association (CPCA), Japanese brands’ market share fell to 17.8% in June from 21.5% a year ago.

The company has not yet introduced a pure electric vehicle and CPCA said the Changsha factory produced only 3,367 vehicles in the first five months of this year, a 75% decline from 2022.

Mitsubishi sales dropped 41% year on year in China, Taiwan, and Hong Kong in the last fiscal year.

An analyst said: “The foreign brands have lost their technology advantage and at the same time, Chinese consumers seem more willing to buy domestic brands.”

According to the FT, the chief executive of rival Mazda, Masahiro Moro, said: “It does seem like we are entering a stage where only the strongest will survive and gain momentum.”