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Mitsubishi Motors to sell stake in Chinese engine maker

Sale comes as Beijing makes push for cleaner electric vehicles

The Japanese carmaker is already in negotiations with the potential buyers. (Photo courtesy of Mitsubishi Motors)

TOKYO -- Mitsubishi Motors is set to cut back its presence in China, selling its stake in a jointly operated engine maker in the city of Harbin, Nikkei has learned.

The Japanese carmaker will sell its entire 15% stake in Harbin Dongan Auto Engine Co. 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 proposed sale comes as the Chinese government furnishes incentives for cleaner electric vehicles, fueling expectations that demand for traditional auto engines will drop.

The joint company was established in 1998, and produces about 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.

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.

Mitsubishi Motors formed a joint venture in 2012 with Guangzhou Automobile Group and others to produce engines and bodies for Mitsubishi vehicles. The joint venture indicated in April that it would cooperate in developing electric vehicles and automated-driving technologies. But demand for traditional engines is expected to weaken in China as authorities crack down on polluting vehicles.

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