Mitsubishi eyes half of China SUV market by 2010

SHANGHAI, Dec 19, 2002; Erin Prelypchan writing for Reuters reported Japanese carmaker Mitsubishi Motors said on Thursday it hoped to grab half of China's burgeoning market for sport utility vehicles (SUVs) by 2010 with its Pajero and Pajero Sport models.

The ambitious target from Japan's fourth largest carmaker will pit it against Toyota Motor Corp's Landcruisers, Honda Motor Corp's CRVs and General Motors' Chevrolet Blazer in a crowded and challenging segment of the world's fastest growing auto market.

China's car sales jumped 55 percent to pass the landmark one million mark this year, thanks to rising incomes, lower prices, and a wider selection of economy cars.

"The market for SUVs is growing so quickly, much faster than our expectations," said Hideyasu Tagaya, Mitsubishi's corporate general manager for Asia, Latin America, the Middle East and Africa.

"We expect very fast growth, and hope to have 50 percent of the market" by 2010, Tagaya said at a press conference to launch the high-end Pajero -- which will sell for 450,000 yuan ($54,360) -- and Pajero Sport, which will sell for 420,000 yuan ($50,740).

Mitsubishi, which is 37-percent owned by DaimlerChrysler AG, will begin selling the two imports in China in a matter of weeks, and hopes to sell 6,000 to 7,000 of them next year, Tagaya said. Both models are made in Japan.

Mitsubishi's optimism over China's SUV demand comes as other foreign carmakers warn of a challenging market.

GM, the world's biggest carmaker, said it has lost money on SUVs thanks to a segment crowded by several foreign players as well as attractively priced domestic models.

INTO THE FRAY

Analysts said Beijing Jeep Corp, a DaimlerChrysler joint venture, is producing far below capacity, too.

China's high-end buyers also prefer a "take me seriously" Benz to a "get out of my way" Jeep, they said.

Mitsubishi was undeterred.

"In the United States and Japan, SUVs have become a symbol of prestige and fashion. I don't see why it should be any different for China in the future," Tagaya said.

The Japanese carmaker is also deep in preparations for its China joint venture to assemble the Pajero Sport and the Outlander models in the country through a joint venture with DaimlerChrysler and Beijing Jeep Corporation.

Production should begin in March at the joint venture, with annual capacity of 10,000 to 20,000 models, the carmaker said.

Mitsubishi said China's total SUV sales will be 128,000 by 2010, about double the size of the market in 2000, when Chinese bought about 60,000 SUVs.

Paul Alcala, president of Beijing Jeep, said the company had not yet decided how much the domestically made Sport models would sell for, but said they would be "significantly cheaper" than the higher-end imported Pajero.

Company executives have said the China-made Pajero sport would likely sell for 300,000 yuan.

Alcala declined to forecast sales from the joint venture, but said they would likely sell more of the domestic models than the imports because of their lower price.

Mitsubishi has imported 200 Pajero Sports to introduce the brand to China before the new venture starts.