Strong South Korean won sealed off Nissan-made Mitsubishi sedan

Article by Andrew Christian, on February 6, 2015

A supposed United States-bound Mitsubishi midsize sedan won’t make it to its destination, no thanks to a sudden appreciation of the South Korean won against the US dollar and the Japanese yen. The sedan was planned to be sourced from Renault-Nissan Alliance’s Busan assembly plant in South Korea, and dealers have been excited about it since it was announced in November 2013.

Mitsubishi, however, terminated the feasibility study after failing to reach a “win-win” outcome for the project. One executive told __ that a very strong Korean won proved the project as simply too expensive. A spokesman for Mitsubishi said the carmaker is looking into other options for launching a new sedan in US, as its sales were hurt by an aging Lancer compact sedan and the dropping of the Galant.

The project could have been a win-win situation for both Mitsubishi and Renault-Nissan. It would fill what seems a missing link in Mitsubishi’s US lineup while helping Renault-Nissan securing work for its underused site in South Korean. While Mitsubishi could have source a new sedan from Nissan from a plant in North America, the latter’s sites in the region are already working at full capacity.

In fact, Nissan is shipping some of the output in North America overseas to take advantage of favorable exchange rates. Ironically, Nissan shipped its one-millionth US-built export to South Korea, which is the destination for its Leaf EV, the Altima sedan, the Pathfinder crossover and the Infiniti QX60 crossover.

Even South Korean brands know how impactful exchange rate surges can be and has been limited exports to the US, even though a free-trade agreement between the two countries is in place.

Hyundai-Kia Group imports just 38 percent of the vehicles being sold in the US, while the rest are produced locally. On the other hand, Mitsubishi could use its underutilized assembly site in Normal, Ill. To make the sedan, but retooling the plant for a limited volume model could be cost-prohibitive.

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