July 13, 2023 (MLN): Mitsubishi Motors' (7211.T) joint venture with China's Guangzhou Automobile Group (GAC) (601238.SS) on Thursday said it would cut staff costs in an attempt to turn the company around after sharp sales declines for sport utility vehicles (SUV) like the Outlander, Reuters reported.

In a statement issued by GAC, the state-owned automaker said it would look to "optimize" its employment as part of an effort to rescue and transform the venture.

GAC did not say how many employees would be affected. It said it would restructure in accordance with law and regulations in China.

Mitsubishi did not immediately respond to a request for comment.

The joint venture, known as GAC Mitsubishi Motors, was launched in 2012 to focus on SUV sales in China.

The announcement follows mounting pressure on the joint venture that makes Mitsubishi's Outlander model. Mitsubishi said in April it would take a $78-million charge for slowing sales at the venture.

SUVs represent the largest share of the growing electric vehicle (EV) market in China, where price cuts and the rollout of new models have taken sales away from combustion vehicles.

Established automakers have been under deepening pressure in China where the market is shifting quickly to EVs and toward newer Chinese brands not operating in the joint ventures that had dominated sales for decades.

AlixPartners has forecast that Chinese brands would take more than 50% of the world's largest auto market for the first time this year.

Mitsubishi's sales in China peaked in 2018, when it recorded sales of over 141,000 vehicles, according to industry data. In 2022, sales had dropped below 33,000 vehicles.

Other foreign automakers are also under pressure to restructure and cut costs, limiting their exposure to China, or roll out new models that can compete on features and price with Chinese EV brands, analysts have said.

Hyundai Motor (005380.KS), the third-largest automaker by sales, said last month it would close another plant in China this year and focus its efforts in China on higher-end models, including SUVs and its Genesis-brand vehicles.

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Posted on: 2023-07-13T16:03:29+05:00