In a bid to minimise its presence in China, Japanese carmaker Mitsubishi Motors is selling its stake in a jointly operated engine making firm Harbin Dongan Auto Engine Company, as reported by Nikkei.
According to the report, Mitsubishi Motors will sell its entire 15 per cent stake in Harbin Dongan Auto Engine Company as soon as the current fiscal year ending March 2020.
It has already applied for approval from local authorities to make the sale; and it is working to sell the shares to China’s Changan Automobile Group and two auto-parts makers in Harbin.
The move comes after the Chinese government decision to provide incentives for cleaner electric vehicle, fueling expectations that demand for traditional auto engines will drop.
Established in 1998, the joint company produces around 500,000 engines a year.
Mitsubishi Motors has received fees by providing licenses and technical expertise, but the company was not producing engines for Mitsubishi cars, the report said.
“From this point, Mitsubishi Motor’s only overseas engine sales operation will be a joint venture established in the city of Shenyang with China Aerospace Automotive Industry Group Co. and others. That company sells engines to other carmakers. But positioning its factory as a complementary facility for Mitsubishi’s engine production, the carmaker will continue to hold its stake in that company,” it added.