File photo/Zhang Jian (NBD)

There have been reports that a Japanese joint venture brand will exit the Chinese market, and its production lines will be transferred to contract manufacturing for self-branded products under the same group. 

GAC Mitsubishi was soon named as the reported brand, with reports saying that the carmaker would sell its Changsha plant to produce electric vehicles for GAC Aion.

In response, a person-in-charge with GAC Mitsubishi said to National Business Daily, "The news is not true, the company has no plans to exit the Chinese market. Currently the company is in normal operation, and the sale of the factory is not on the agenda."

Despite the official denials, there is no denying that the joint venture is in an embarrassing situation. As early as last year, rumors surfaced that GAC Mitsubishi would exit the Chinese market. Behind the frequent rumors is the carmaker's weak sales.

Information on the official website shows that GAC Mitsubishi has five models for sale, including four fuel models - the all-new Outlander, New ASX, Eclipse Cross and imported L200 - and new energy vehicle Airtrek. Among them, the Outlander has been the main contributor to sales of GAC Mitsubishi for a long time.

Since 2020, GAC Mitsubishi's sales have plummeted. Official data show that GAC Mitsubishi's sales in 2020-2022 were 75,000, 66,000 and 33,600 units, respectively, down 43.62%, 11.99% and 49.13% year-on-year. In the January-February period of this year, GAC Mitsubishi sold 1,498 vehicles in total, down 79.86% year-on-year.

At the same time, GAC Mitsubishi's financial situation was also in a dilemma. The semi-annual report of GAC Group showed that as of June 30, 2022, GAC Mitsubishi's total liabilities came in at 6.574 billion yuan and total assets at 8.132 billion yuan, with an asset-liability ratio of 81%.

In September 2022, GAC Group injected 1.5 billion yuan into its joint venture, of which 1 billion yuan was used to improve GAC Mitsubishi's cash flow. From the current observations, it can be seen that the huge amount of capital input has had little effect.

All these indications make it hard to avoid speculation that GAC Mitsubishi may follow in the footsteps of Dongfeng Renault, GAC Fiat and other joint ventures to exit the Chinese market, which is just a matter of time.