Only 41,000 Mitsubishi-brand vehicles were sold in China last year, less than the monthly sales of its Japanese counterparts Toyota and Honda.  [Photo/China Daily]

BEIJING - Moving to improve its weak presence in China's auto market, Mitsubishi Motors Corp recently signed a memorandum of understanding with Guangzhou Automobile Group Co (GAC) to form a new 50-50 partnership.

It would be the Japanese manufacturing giant's first car joint venture in the nation in which it holds a full 50 percent stake.

According to the memorandum inked on Nov 5, the new venture will emerge after a reshuffle of GAC Changfeng Motor Co, a Shanghai-listed SUV maker that has GAC, Changfeng Group and Mitsubishi Motors as its top three shareholders.

Mitsubishi now has a 14.59 percent share in the company, while GAC owns 29 percent and Changfeng Group holds 21.98 percent.

Before launch of the new venture, GAC will first file to delist GAC Changfeng from the Shanghai Stock Exchange, according to its announcement.

The announcement also said that the new venture will require signing of a share transfer agreement and joint venture contract before it is formed.

It also needs approval from regulatory authorities.

Mitsubishi's public relations chief in Tokyo said that the new venture is expected to be established in June next year, according to a recent report on Chinese-language newspaper National Business Daily.

GAC is the largest carmaker in South China and runs joint ventures with Toyota and Honda, which makes it a good partner for Mitsubishi, said analysts.

GAC Changfeng now produces only one model carrying the Mitsubishi badge - the Pajero sports-utility vehicle. The company also makes Changfeng-branded SUVs and pick-ups.

Analysts said that the new joint venture between Mitsubishi and GAC will mainly focus on making SUVs due to GAC Changfeng's expertise in the sector.

As well, Mitsubishi already has its sedans and MPV products produced at another Chinese company - Soueast Motor Co.

Mitsubishi has a 25 percent share in Fujian-based Soueast Motor, which now builds the Lancer, Lancer EX and Galant sedans as well as the Zinger crossover.

Only 41,000 Mitsubishi-brand vehicles were sold in China last year, according to statistics provided by market research firm JD Power.

Free trade deal lifts businesse Related readings:  Mitsubishi Motors recalls 9,390 cars in China  Guangzhou Automobile offers to buy out Denway investors  Guangzhou Automobile Group Corp Idea SUV concept car

This is less than the monthly sales of its Japanese counterparts Toyota and Honda in China.

According to previous reports, Mitsubishi President Osamu Masuko said earlier this year that the company has the goal to sell 300,000 vehicles a year in China by 2015.

"We need the 50-50 venture to be able to make cars our way," Masuko was quoted in a Bloomberg report in June.

Yet analysts noted if the new joint venture has just one or two successful SUV products, it will be hard to rapidly improve the company's overall business in China.

Mitsubishi also has to balance the relationship between its two local partners - GAC and Soueast, they noted.

According to Chinese-language media reports, Soueast Motor Vice-General Manager Luo Derun said the company isn't concerned that Mitsubishi will be partial to its new partnership with GAC. "Mitsubishi will continue to support Soueast," he said.