Mitsubishi not planning to produce SUV’s in China

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Mitsubishi China have been relying more and more on engine sales in recent years to fuel the recent boom in Chinese car manufacturers that have designed their own cars, but lack the R&D engine power. Currently Mitsubishi has a small JV with SouEast motors, a further JV with Changfeng and an engine JV with Harbin Dong-An. Harbin Dong-an and Mitsubishi also plan to further automatic gearbox development for the Chinese marketplace.

In a recent interview with Mitsubishi China’s sales manager, Mr. Fan Tian Jian Zhi (his Chinese name) by Shanghai Securities Report (SSC) revealed that Mitsubishi currently have no plans to begin production of SUV’s again in China in the near future

SCC: When compared with your competitors in the Chinese market, your competitors have more of a global line up. In the future Mitsubishi what will Mitsubishi do to strike a balance in the Chinese market?

Fan Tian Jian Zhi (FTJZ): In the global market place Mitsubishi has three markets where we dominate, the Pajero and the Outlander represent the SUV market, the Eclipse is our two door sports models and our work in the electric car segment is also well known.

In China we are currently engaged in three different business aspects. The first one is a joint venture with Harbin Dong-an Engine company, we are working on automatic gearboxes and other core car parts. The second is working on our import business, which is mostly expanding the Mitsubishi brand in China, and to import the latest Mitsubishi models into China. Our third business model is to build cars with Changfeng and also SouEast motors.

Translation by CCT:
SCC: The fact remains that even with your best SUV products, your sales compared with Nissan, Honda, and even Toyota are very small. The Honda CRV has exploded in the Chinese market, the Qashqai has also had hit a chord in the Chinese market. Why do you think that Mitsubishi and its competitors have such a large sales gap?

FTJZ: These companies have already been in China for a long time. Also their JV’s have managed to quickly under go product localisation much faster than what Mitsubishi have managed. Previously our imported products have all had engine displacements higher than 3.0L, which once the sales tax was adjusted made our products expensive and left quite the effect on our sales.

Actually from the products point of view, Mitsubishi’s offerings are stronger. Our AWD technology is more advanced, for example the CRV is based on a sedan platform, our engine power is more advanced, and the second point is that our cars are bigger with more room making them more comfortable for drivers and passengers.

SCC: Then why doesn’t Mitsubishi copy the Toyota and Nissan way of speeding up production localisation for your SUV models?

FTJZ: Previously, although we have car producing JV’s with two partners we currently don’t have any plans to bring our latest SUV models in China. Our JV with Soueast is primarly focused on building sedans and hatchbacks. Our JV with Changfeng is currently under review, although Changfang currently produce SUV’s since their takeover by Guangzhou Auto we still don’t know what sort of changes will occur in this JV, it could be that they plan to produce Chrysler products in China, it is unlikely that they will produce any new SUV’s.

We do have another plan; for example importing cars is easier, especially importing cars that are equipped with the latest technologies. If we were to produce these cars in China we would need to expand our facilities and worry about the supplying of parts. This needs at least two years time, therefore it is much easier for us to import cars directly into China.

SCC:In July this year Mitsubishi China put up 50% capital to build Mitsubishi Automotive Sales China Limited. People in the automotive industry believe that Mitsubishi plan on solely importing cars into China. What is your sales goal for 2009, and how were previous years sales?

FTJZ: In recent years Mitsubishi’s imported car sales have gained traction, 2006 we sold 4000 vehicles, in 2007 we sold 10,000 vehicles and 14,000 vehicles in 2008, our 2009 (running from 1st April to March 31st 2010) sales goal has been set at 16,000 vehicles, but from April to September we have already sold over 6000 vehicles.

SCC: Then in the next two quarters you must sell 10,000 vehicles, do you think this is possible?

FTJZ: It shouldn’t be a problem. We have prepared some very competitive vehicles. In September this year we prepared 300 3.0L Pajeros, but before we even shipped the cars the dealerships in China had sold out. However the recent sales tax increase on large displacement cars has affected our business, a car we could sell for 400,000 before has now jumped in price to 580,000rmb.

Yesterday we launched four new models of the 2010 Outlander EC, which carries the latest 3.0L engine and S-AWC (all wheel drive system) however we have not raised the price.