Updated: Mitsubishi will stop selling new cars in the autumn

Mitsubishi will sell new cars until the autumn, at which point it will transition to an aftersales only business, the company has confirmed.

It means new examples of models such as the Outlander plug-in hybrid (PHEV) and L200 pick-up will cease to be available by the end of the year.

The Japanese manufacturer unexpectedly announced it was pulling out of both the UK and European markets, last year.

At the time of the announcement a Mitsubishi spokesman told Fleet News: “Stock-wise we have access to a minimum of around 15,000 new vehicles across the entire range presently, with the option to order more L200 and Mirage stock further down the line, so we have no concerns in terms of vehicle supply for the foreseeable future.”

While some new vehicles will be procured by Mitsubishi from Alliance partner Renault, the company has confirmed that they will not be offered for sale in the UK and will not be produced in right-hand drive.

FLEET GUARANTEE

Both the Mitsubishi Outlander PHEV and L200 have proved popular with fleets, with the Environment Agency and Highways England just two of those impacted by the carmaker’s decision to wind up its UK and European operations.

The Environment Agency has been replacing its fleet of diesel vehicles with Mitsubishi Outlander PHEVs and has ordered 96 to date.

Dale Eynon, director of Defra Group Fleet Services, explained that the Outlander PHEV (commercial variant), in particular, has been a “vital part of our programme to reduce emissions, while maintaining full operational capability and being cost-effective”.

The manufacturer says has been contacting its fleet clients personally to offer them assurances.

“All our clients will be taken care of for as long as they are running our vehicles, that is a guarantee,” said the Mitsubishi spokesman.

Highways England has numerous Mitsubishi vehicles on its fleet, including a fleet of Mitsubishi Outlander PHEVs as asset delivery inspector vehicles. All have been bought outright.

Highways England said it was in talks with Mitsubishi about the vehicles on its fleet to “maintain business as usual. This includes the SMR for our fleet”.

SALES FIGURES

UK registrations from 2020, show Mitsubishi had sold 9,076 new vehicles, compared with 16,199 during the previous year.

The 43% decline in new registrations is more than the industry average, which dropped by 29% during the year.

The Mitsubishi Outlander PHEV, which has proved popular with company car drivers thanks to low benefit-in-kind (BIK) tax, was updated with new trim levels and a new infotainment system, last year. Prices started at £35,455 (on-the-road) for the revised plug-in hybrid SUV.

However, Government cuts to the plug-in car grant announced two years ago, meant the Outlander PHEV was no longer eligible.

The plug-in grant was cut by £1,000 and no longer applied to hybrid cars with a range of less than 70 zero-emission miles. The Government said the reduction in funding – from £4,500 to £3,500 – for the cleanest cars, and withdrawing the grant completely for the likes of the Outlander, was a sign of its success.

Its BIK tax savings credentials have maintained its traction in the market, however, with the Outlander outselling every other plug-in hybrid SUV on the market in 2020, with 3,336 Outlander PHEVs registered from January to December.

It means around a third of all new vehicles sold by the manufacturer last year was an Outlander PHEV and more than 53,000 examples have now been registered in the UK.

£1.3 BILLION LOSS

That sales success, however, comes after Mitsubishi reported a £1.3 billion loss in the first quarter of 2020, resulting in its decision to focus on faster growing, more profitable markets, with the aim of cutting costs by 20% over the next three years.

“The company is effectively pulling out of Europe to focus on the likes of south Asian markets,” said David Bailey, professor of business economics at the Birmingham Business School and senior fellow at UK in a Changing Europe.

Along with exiting UK and European markets, Mitsubishi will aim to improve its bottom line by cutting R&D spend, undertaking ‘salary reviews’ and shutting one of its plants in Japan by next year.

Its European manufacturing operations at the Nedcar plant in the Netherlands were sold in 2012, with cars, instead, imported to Europe.

Planned new models the EU and UK will miss out include a new Outlander SUV and a new Battery Electric SUV (2021), a plug-in hybrid Outlander and L200 Pick up (2022), and the Xpander MPV and Pajero Sport SUV (2023).

Bailey added: “From a consumer point of view, the pull-out is a great shame as the firm has pioneered plug-in hybrid technology in the UK and Europe.”

Bailey believes that the technology will probably find its way into new Renault-Nissan-Mitsubishi Alliance models from Renault and Nissan.

“While the Alliance plan had anticipated a refocusing by Mitsubishi on south-east Asia, I’m still surprised that Mitsubishi is effectively leaving the UK/EU market completely,” he said.

“I had anticipated Mitsubishi models being assembled off the same platforms as Renault and Nissan models, and produced, for example, at Sunderland, so as to maximise the alliance’s market share in the region.”

However, Bailey doesn’t rule out the brand being resurrected in the UK market in this way at some point.

IMPACT ON RVs

Pricing experts at Cap HPI have played down the potential of Mitsubishi’s decision to exit the UK having a negative impact on residual values (RVs).

Andrew Mee, head of forecast UK at Cap HPI, told Fleet News: “It’s important to remember that Mitsubishi is an established brand with some popular models, notably Outlander and L200, and we expect these to continue to be attractive as used cars.

“While some funder and lender nervousness can be expected around residual values, there have been precedents of brands exiting the UK without values suffering, and these include MG Rover, Saab, Daewoo and Chevrolet.

“In all cases, values subsequently moved in line with market and sector trends and were not adversely affected by the brand’s withdrawal.”

Mee argues that the expected availability of spare parts and the knowledge and experience of service engineers should help used sales and values.

Furthermore, he says it’s even possible that, as there will be a finite number of Mitsubishi cars registered in the UK, as volumes on the road decrease over time, then interest from loyal customers could have a “positive impact on used values”.