(Yicai) Oct. 25 -- Japanese automaker Mitsubishi Motors will stop making cars in China and transfer its joint venture stake to its Chinese partner, against the backdrop of the rise of domestic brands and the rapid shift to electric vehicles in the world’s biggest auto market.

Mitsubishi and Mitsubishi Corporation will sell their 30 percent and 20 percent stakes in GAC Mitsubishi Motors to GAC Group for CNY1 (14 US cents), the Chinese state-owned auto giant said yesterday. Shareholders will inject up to CNY1.6 billion (USD218.9 million) in the JV to settle debts and compensate suppliers and distributors, it added.

The three set up the Changsha-based JV in 2012. Its sales reached a record high of 144,000 vehicles in 2018, but have fallen each year since then. At the end of this March, it had assets of CNY4.2 billion and liabilities of CNY5.6 billion.

GAC Mitsubishi intends to sell equipment with an appraised value of about CNY442 million (USD60.5 million) to GAC Aion, GAC’s new energy vehicle unit, and lease land and plants to it for CNY130 million a year, with mass production scheduled for next June, Guangzhou-based GAC said.

With GAC Mitsubishi’s Changsha plant, GAC Aion's annual capacity will reach 600,000. It sold 351,000 cars in the first nine months of this year, up 93 percent from a year earlier, while setting production and sales targets of 1 million for 2025.

The JV’s restructuring can maximize the revitalization and utilization of its core assets, solve the bottleneck of GAC Aion's production capacity, save time and investment building a new factory, seize the market opportunity to develop NEVs, avoid the dissolution and liquidation of the JV, and assist the re-hiring of employees, GAC pointed out.

The three partners will continuer to own GAC Mitsubishi’s sales unit, increasing its registered capital by CNY450 million and continuing to provide spare parts and after-sales service to GAC Mitsubishi car owners.

Mitsubishi Motors entered the Chinese market in the early 1980s, establishing its first JV in the country with China Motor Corporation.

Editor: Martin Kadiev