The Japan Times reports, Mitsubishi Motors has suspended its China business indefinitely and will lay off staff after years of poor sales in a market rapidly turning to electric vehicles. China is at about 35% EV today and will head to 50% EV in 2024 and 70% EV in 2025. Car makers without EVs or with very weak EV offerings will get wrecked. Other Japanese carmakers are down 30% in China sales in 2023 and often already saw declines in 2022. Many cars are not sold and are on dealer lots.
Mitsubishi Leaves China and Other Troubled Car Makers
Volkswagen in China
Juy 14, 2023, Volkswagen reports its Group deliveries increased 12.8% year-on-year from January to June, registering growth in every region except China, which saw a 1.2% drop in total deliveries and a 1.6% drop in battery-electric cars. Volkswagen makes 40% of its revenue from China. If Volkswagen is outcompeted with EVs in China, then they could lose 20-30% of global sales in the next 2-3 years. Europe and other regions are also going to electric cars but are 1-4 years behind China. China has more small and cheap cars that are easier to electrify.
The China Association of Automobile Manufacturers reports faster drops in sales for Volkswagen and Toyota. Volkswagen was -5.1% in the first half of 2023 in China. Volkswagen was losing a lot of sales of the Santana (-51.1%), Golf (-45.9%), T-Roc (-40%) and Bora (-27.1%). The VW ID.3 (+55.3%), Polo (+53%) and Lamando (+44.8%) had improved sales. Toyota was down -8.1%. Toyota fell below the 800,000 unit mark for the first half.
Volkswagen brand CEO Thomas Schäfer raised the alarm about rising costs at the firm. This is the final wake-up call. Schäfer is calling for a short-term spending freeze to get costs under control. Schäfer is looking to reduce costs by about $5 billion per year for the next three years.
Mazda also Having Problems
Mazda CEO Masahiro Moro said business conditions in China would become increasingly tough over the coming year to 18 months. Mazda has a joint venture with Chongqing Changan Automobile and China FAW. Moro said it was not planning to “scale back”, although the company was planning to cut fixed costs.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
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China’s poorly considered decision to move toward an all electric auto fleet at warp speed bodes very ill for China’s future, which is very dark indeed.
China has some of the minerals and much of the minerals processing capacity but that will not be enough. No other country could go as far as China down that futile highway, but that is nothing for China to boast about. First to oblivion! Wonderful achievement.
Everyone is getting squeezed out of the China market by domestic brands. Meanwhile Tesla is taking market share in the most lucrative market segments outside of China.
Hard to see how some of these companies avoid bankruptcy this decade. A lot of them will probably disappear for good.