Mitsubishi Motors to stop production in Europe by end 2012

Mitsubishi Motors Corp will stop production of cars in Europe at the end of this year, due to excess capacity in the region and demand declines in the world's second-richest continent amid the ongoing eurozone debt crisis.

Based in Tokyo, Japan's sixth-largest carmaker by production, Mitsubishi said that it will stop production of the Colt compact car and the Outlander sports-utility vehicle at its only European factory Netherlands Car B.V. (NedCar) located in Born in the Netherlands, at the end of 2012.

Mitsubishi said that Europe is and will continue to be an important market and it will continue shipping cars to Europe from Thailand and Japan.

Started as a three-way joint venture in 1991 between Mitsubishi, Volvo Cars and the Dutch government, Mitsubishi took full control of NedCar in 2001 after acquiring Volvo Car's 50-per cent stake.

NedCar produced Mitsubishi's Carisma from 1995, and later the Space Star. NedCar had produced 1.1 million vehicles to date with 85 per cent of the parts for the Colt and 20 per cent for the Outlander being procured locally.

''Due to the wildly fluctuating operating environment which automobile manufacturers currently face, MMC could not come up with a reasonable solution to utilise NedCar,'' Mitsubishi said in the statement. ''MMC has concluded it is not viable to allocate a new production model at NedCar.''

Although Mitsubishi's overseas production output last year rose by 4.7 per cent, output in Europe fell 12 per cent to 23,808 units.

The global recession followed by the eurozone debt crisis has hampered sales in the region, which has seen a steady decline since 2007. Poor sales has seen the region's capacity increase by 41 per cent to 2.92 million vehicles in 2012.

According to PricewaterhouseCoopers, sales may fall to about 13 million vehicles this year, the fifth straight annual drop.