Mitsubishi will stop developing models for the European markets indefinitely, and will likely withdraw from the UK market altogether. The announcement comes just after Mitsubishi posted grim financial results, with a £1.29bn loss in the first quarter of 2020 alone.
The backdrop is of an entire car industry struggling to manage in the face of the COVID-19 crisis. But with the UK in particular representing a tiny fraction of its overall sales, the company felt it best to cut its losses here, along with the entire European market.
Mitsubishi’s market share in the UK is less than 1%, and just 0.72% in 2020 to date, with a range comprising a handful of niche SUVs, the L200 pick-up and the underwhelming Mirage. Mitsubishi’s decision is the outworking of a business plan that it calls “Small But Beautiful” – a euphemism for massive cost-cutting and restructuring across its global business.
The company aims to reduce costs by 20% by focussing on its most profitable markets – Japan and the US, namely – and optimising production processes. It’s thought that this may be part of a wider brand restructure plan along with Nissan and Renault – a Nissan-Renault-Mitsubishi alliance has been in place since 1999 – but that’s conjecture at present.
Whatever the background, the news comes as a massive surprise to the Mitsubishi dealer network, which is supplied exclusively in the UK by importer Colt Car Company, based in Cirencester.
In a letter to its dealer partners, Colt Car Company said it “did not, at any point, anticipate receiving this news.” In response it will look to keep as many of its partner dealerships open by furnishing with cars from other ‘emerging’ brands, although it’s not clear who they are. MG springs to mind.
The letter stated:“In terms of the future for The Colt Car Group of Companies, we have already been looking at opportunities to bring additional new vehicle brands into the UK as a distributor and have already been in early dialogue with some alternative emerging market brands with an EV product strategy.
“Whilst the discussions are at an early stage, in light of today's announcement we are focused on accelerating these opportunities with the goal of introducing additional brands to our business as quickly as possible.
“Clearly, if we are able to progress some of these initial contacts into a viable business proposition it will represent future options and opportunities for us all.”
The news is most problematic for those smaller dealerships who only sell Mitsubishi cars, as opposed to multi-franchise dealers who will be better equipped to take the hit.
It means that the planned introduction of the new Outlander PHEV (plug-in hybrid electric vehicle) and Eclipse Cross plug-in hybrid are now, of course, cancelled.
Colt Car Company has said that it will keep its dealerships open and selling cars for as long as possible, most likely until the current range no longer complies with European regulations. It will also ensure that existing owners will continue to receive proper parts and aftersales service.
Keyword: Mitsubishi to withdraw from UK market, most likely