Mitsubishi Outlander

Apparently Mitsubishi and PSA Peugeot Citroen are working again on another project together, this time to produce compact cars with engines of between 1.0 litre to 1.3 litre capacity. An agreement is said to be announced by the end of this year.

Apparently Mitsubishi will start making this new compact car in Thailand by the end of Q1 2012, likely under Thailand’s eco car incentive program. Production will then expand to China, India and Brazil, which are widely hailed as new fast growing emerging markets that will save the bottom line for many fat auto manufacturers while they continue to trim their operations. The European markets are where PSA will come in – they will likely be sold as Peugeots and Citroens there.

Peugeot 4007
Peugeot’s rebadged Mitsubishi Outlander

Are we looking at a new Colt which will then be rebadged under the Peugeot and Citroen brands? The Japanese and French companies already have existing partnerships based on the Mitsubishi Outlander SUV and the Mitsubishi i MiEV electric car, both of which are rebadged and restyled into Peugeot and Citroen counterparts for the European market.

PSA’s relationship with Mitsubishi falls under the supervision of newel appointed Head of Asian Operations Gregoire Olivier. A big part of Olivier’s job will be to help the company shift the focus of its business away from Europe. He will also take care of the South East Asian market. PSA Peugeot Citroen is generally said to be over-reliant on the European market, where it sells about two thirds of its cars. Europe is already pretty much mature, however most of PSA’s products are tailored for the European market, where sales volumes aren’t expected to increase anytime soon.

Citroen’s rebadged Mitsubishi Outlander

PSA Peugeot Citroen has to develop strong products for emerging markets in order to increase its volume and using Mitsubishi’s “Asianised” products are a good stop gap measure to get a good emerging market vehicle to sell quick without incurring high development costs of developing these products by itself. An example of a Peugeot product that it developed for the Asian market recently is the Peugeot 408, which is a lengthened sedan version of the 308 that was unveiled in China recently.

Other than the car deals with Mitsubishi, PSA also cooperates with BMW and Ford for its petrol and diesel engines respectively, and with Fiat SpA for commercial vans and Toyota for the French versions of the Toyota Aygo. Rebadging to save development costs is happening all over the world and we shouldn’t take Proton rebadging a Mitsubishi product for a Waja replacement too negatively as it will help free up development funds for other segments with higher volumes.