TOKYO (majirox news) –Mitsubishi Motors will be ending its production of cars in Europe by next year, according to reports appearing over the weekend in the Nihon Keizai Shinbun. This will make Mitsubishi the first Japanese automobile manufacturer to withdraw from Europe.
Mitsubishi manufactures the Colt and the Outlander in Holland. Although Citroen models are built in the same factory, production remains well below the break-even point; this contributed to Mitsubishi Motors’ 11.4 billion yen ($143 million) operating loss in Europe last quarter. Mitsubishi is now in the fourth year of declining sales in Europe, and 2012 is not expected to bring improvements.
“The Netherlands does not spring to mind as a hub of European automobile manufacturing,” says Paul Van Horn, who has written extensively about the transportation industry in the Benelux countries. “But the south of Holland has considerable manufacturing of trucks and heavier vehicles, where the Dutch have had good success. DAF trucks, a Dutch manufacturer, now owned by Paccar, the 3rd largest truck manufacturer in the world is located there and Scania has its biggest manufacturing facility there, too.”
In 1975, when DAF trucks, which was also manufacturing cars at the time, decided to get out of the automobile business, their plant, Netherland Cars, or NedCar BV, was sold to Volvo. By 1991, Volvo split into two firms and sold its’ car manufacturing business, in the process selling part of NedCar BV to Mitsubishi. In 2001, NedCar BV came to be solely owned by Mitsubishi and became their production base for Europe.
“The NedCar BV plant is basically pretty outdated, and Mitsubishi imported almost all their components from Japan,” says Van Horn. “Even before the exchange rate of the yen began to deteriorate against the Euro, it was a comparatively expensive factory for building automotives.”
The Dutch government has already indicated that they will be seeking buyers for Mitsubishi’s share of NedCar BV, but the end of Mitsubishi production in Europe means that Mitsubishi must rely on exports, probably from Thailand or other low-cost manufacturing bases, to meet demand in Europe.