Mitsubishi Pull-Out Favors Asia

picture credit: Mitsubishi

By Wendy Laursen 07-30-2015 05:55:24

The Japanese car maker Mitsubishi Motors has decided to end production and sell its U.S. car plant in favor of Asian production. 

It’s a move that current low shipping rates may have influenced and one that makes Mitsubishi the first major Japanese car manufacturer to end production in both the U.S. and Europe. 

Annual production at the U.S. plant, which makes the Outlander SUV, has fallen to 64,000 vehicles from more than 200,000 in 2002. The company only sold 82,000 vehicles in the U.S. last year - less than one percent of the total market, reports local Japanese media.

Mitsubishi has built a plant in Thailand, bought one from Ford in the Philippines and is building one in Indonesia.

“Nowadays, car producers prefer to move production closest to their main or best developing markets,” says Dirk Visser, Senior Shipping Consultant at consultants Dynamar B.V. of the Netherlands. “Economically, the U.S. has been doing very well with Europe seemingly emerging from a rather deep economic crisis. However, recently confidence has started slipping in both areas. Contrarily, South East Asia is the current bright spot of growth, and hopefully they will not become infected by China's apparent downturn.”

South East Asia is now the place to produce or assemble cars, says Visser. “Many vehicle carriers operate the Far East-Europe and Far East-North America routes, so that shipping factory-new cars at reasonable rates to these Western markets will not represent any problem.”

Mitsubishi is seemingly concentrating production in South East Asia. Shipping costs are down or at least bearable and not likely to hinder sales from cars ready from Asia, says analyst Theodor Strauss, a past guest lecturer in Rotterdam and South Korea and former Managing Director of K Line (Nederland).

“With the post-Panamax PCTC vessels coming out of the yards, shipping costs will perhaps further show a downward trend, which will allow shipments from Indonesia, the Philippines and Thailand most efficiently into the U.S.,” says Strauss.

Earlier this year Mitsubishi Motors Chief Executive Osamu Masuko cited Indonesia as a fast-growing market along with other South East Asian prospects such as Myanmar, Cambodia and Laos. South East Asia, which now accounts for around 20 percent of the company’s sales.

Other car makers have already made the move to Asia. Suzuki Motor Corporation largely withdrew from the U.S. market in 2012 to focus on countries such as India, and Daihatsu Motor Company abandoned the U.S. two decades ago to focus on countries such as Indonesia.

Mitsubishi will continue selling cars in the U.S. by importing them from Thailand and Japan.