March 20, Guangzhou Automobile Group Co., Ltd. (hereinafter referred to as “GAC Group”) announced that it agreed to transfer 100% of the equity of Hunan Smart Car Management Co., Ltd. (hereinafter referred to as “Smart Co.”) by agreement to its holding subsidiary, GAC AION New Energy Vehicle Co., Ltd. (hereinafter referred to as “GAC AION”), and the transfer price will be determined based on the evaluation results of the relevant asset evaluation report, which is 191 million yuan. At the same time, 1.858 billion yuan will be injected into Smart Co., and the source of funds will be raised by GAC AION itself.
The predecessor of Smart Co. is Guangzhou Mitsubishi Motors Co., Ltd., which was established in May 2012 by GAC Group, Mitsubishi Kogyo Kabushiki Kaisha, and Mitsubishi Shoji Kabushiki Kaisha with a ratio of 5:3:2. The cooperation period is 30 years. After confirming the “romantic relationship” with GAC Group, Guangzhou Mitsubishi has successively launched models such as ASX Jinxuan, Pajero, and Pajero Jinchang. However, the sales are average. It was not until the introduction of the third-generation Outlander in 2016 that the sales of Guangzhou Mitsubishi improved. In 2018, Guangzhou Mitsubishi sold 144,000 vehicles, which was the peak of Mitsubishi’s sales in China.
While Guangzhou Mitsubishi created its sales peak, it also hid hidden dangers. Guangzhou Mitsubishi relies heavily on the Outlander model, which accounted for 73% of Guangzhou Mitsubishi’s total sales in 2018. In order to reduce the dependence on a single model, Guangzhou Mitsubishi launched the Yige model in November 2018, and positioned it as the first global strategic model of Mitsubishi Motors in the new century. Since then, with the increase in the penetration rate of new energy vehicles, Guangzhou Mitsubishi launched three products in 2020, namely, the 2020 Geely EV, the 2020 Pajero, and the new Jinxuan. However, these models did not make much splash in the market. At the same time, Guangzhou Mitsubishi’s dependence on the Outlander model has continued to increase, reaching a maximum of 90%, and the missed iteration of the Outlander and the decline in the influence of the Mitsubishi brand have led to the decreasing presence of Mitsubishi brand vehicles in the Chinese market. In 2022, Guangzhou Mitsubishi sold 33,600 vehicles, ranking the bottom in GAC Group and becoming the joint venture brand with the largest decline. In 2023, the market has repeatedly rumored that a certain Japanese joint venture brand will delist. Guangzhou Mitsubishi has repeatedly refuted the rumors, but in the end, it still failed to escape the shuffle of the market.
It is actually expected that GAC Group will transfer the equity of Smart Co. to GAC AION. On October 24, 2023, GAC Group announced that GAC Group will acquire 30% and 20% of the equity of Guangzhou Mitsubishi held by Mitsubishi Motors Industries Co., Ltd. and Mitsubishi Corporation at a consideration of 1 yuan. The local production of Mitsubishi brand vehicles in China will be terminated, and later, Guangzhou Mitsubishi will become a wholly-owned subsidiary of GAC Group. GAC AION will use the Hunan factory of Guangzhou Mitsubishi to achieve increased production and expansion. On February 27, 2024, Guangzhou Mitsubishi was restructured, the company name was changed to Hunan Smart Car Management Co., Ltd., and Mitsubishi Motors Industries Co., Ltd. and Mitsubishi Corporation withdrew from the shareholder ranks and were wholly-owned by GAC Group.
GAC said that on the one hand, it can maximally revitalize and utilize the core assets of GAC Mitsubishi, solve the production capacity bottleneck of GAC Aion, and save the time and investment cost of building new factories. On the other hand, it can also avoid the dissolution and liquidation of GAC Mitsubishi, protect the rights and interests of consumers, and assist employees in re-employment.
In 2023, GAC Aion’s wholesale sales for the whole year were 480,000 vehicles, with a year-on-year increase of 77.02%. It has two factories in China, both located in Panyu District, Guangzhou. One was built in 2019, and the other took over the GAC FCA Guangzhou factory, with an annual production capacity of 400,000 vehicles. The GAC Mitsubishi factory in Changsha, Hunan, will become the third factory of GAC Aion, and it is planned to achieve mass production in June. Then, the annual production capacity of GAC Aion will reach 600,000 vehicles.
According to publicly available information, GAC Aion will challenge the annual sales target of 800,000 vehicles in 2024, and the production and sales will reach 1 million vehicles in 2025. While setting ambitious goals, how to solve the production capacity is also a major issue. Data shows that in January and February 2024, Aian New Energy’s sales were 21,011 vehicles, with a year-on-year decrease of 45.13%.
