Mitsubishi and Guangzhou Auto form JV

GAC Mitsubishi joint venture is revealed in Changsha, despite rising tensions, and will produce SUVs.

Guangzhou Automobile Group Co and Mitsubishi Motors Corp have unveiled their joint venture, GAC Mistubishi, in central China's Hunan province. The venture will make Mitsubishi-badged cars and will soon begin building its first vehicle, the Mitsubishi ASX compact SUV, which will be followed shortly by the Mitsubishi Pajero Sport SUV.

Unlike some of its counterparts, Mitsubishi has managed to weather the recent anti-Japanese tensions well, seeing sales for the first eight months increase by one percent year-on-year to 40,975 vehicles.

However, Guangzhou Auto has experienced a steep fall in share price as a direct result of its Japanese partnerships, which also include ventures with Honda Motor Co and Toyota Motor Corp.

The company's market capitalisation fell more than 10 billion yuan ($1.6 billion) in August as speculators anticipated a slump in sales of Japanese cars. The company's current market cap stands at $11.73 billion.

Toyota, Nissan and Honda have also seen share prices plummet in September due to the international dispute. While China's state-backed news organ China Daily reported that “Toyota denies withdrawing from China”, the high-profile coverage of the non-story may have further fanned flames of uncertainty.

Although sales have dropped off sharply, Toyota is still the 4^th largest foreign automaker in China, employing more than 28,000 people and producing 800,000 cars a year. A withdrawal seems unlikely, however its future in the market remains unclear.