Mitsubishi Motors may raise stake in South East Motor

Shanghai, June 23 (Gasgoo.com) Mitsubishi Motors Corp. has been reducing its investment in GAC Changfeng Motor Co., one of its vehicle-manufacturing partners in China, but increasing its stake in the other manufacturing partner, South East Motor Co., based in the southeastern province of Fujian. Mitsubishi thereby is more likely to raise its stake in South East Motor, Osamu Masuko, president of the Japanese automaker said recently.

Mitsubishi Motors plans to raise the stake in one of its two joint ventures in China to 50 percent by 2011 and produce a new small car at the unit after increasing its shareholding, Osamu Masuko said in an interview earlier in Tokyo.

Taking a bigger stake in one or both ventures would give Mitsubishi Motors greater influence over the models it makes and sells in China, the world's biggest auto market. However, if it fails to raise 50% stake in its Chinese joint venture, it may start seeking a new partner at the end of this year, Osamu Masuko added.

South East Motor Co. is jointly established by China Motor Corp. from Taiwan., Fujian Motor Industry Group Co. and Japan's Mitsubishi Motors Corp.. The three shareholders hold 50%, 25% and 25% stake in the joint venture respectively. According to Chinese auto industry policy, the domestic company's equity ratio should not be less than 50% in a joint venture, so Mitsubishi Motors will have to obtain the entire 25% stake from China Motor Corp., which will be very difficult to achieve.

Mitsubishi Motors aims to sell 180,000 vehicles this year in China and 300,000 units by 2015. If we can build a 50-50 joint venture in the country, it will be much easier for us to achieve the goal, Osamu Masuko said.

China's vehicle sales may rise 17 percent this year to 16 million, and annual demand may eventually exceed 30 million, according to the industry information center.