Japanese automaker Mitsubishi will take a one-time hit of 10.5 billion yen ($78.31 million) owing to declining sales in China, the company announced on Tuesday. The automaker, however, made no changes to its full-year results forecast as the impact from the extraordinary loss had already been incorporated into a previously announced outlook “to a certain extent”.
China is one of the world’s largest car market where competition has intensified so much, forcing automakers into a price war. Despite being a minor participant in that market, Mitsubishi’s loss declaration is the latest example of how foreign automakers producing combustion-engine vehicles are suffering a rude awakening as China’s electric car drive leaves them behind.
Recently, Toyota’s new CEO Koji Sato said that they will have to move faster after encountering pressure in China, particularly in the country’s expanding market for battery-powered and plug-in hybrid electric vehicles. CEO of General Motors, Mary Barra said the company planned “aggressive measures” to cut costs throughout its China operations, where sales fell 23% in the first quarter and profitability plummeted.
Mitsubishi said it would post the extraordinary loss despite introducing a new Outlander model in China last December. In an official statement, the company said:
“Amid changes in the Chinese domestic market itself and intensifying competition, sales targets continued to be missed, and profitability is expected to decline.”
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