TOKYO Japan's Mitsubishi Motors Corp (7211.T) said on Wednesday that it will sell its car plant in the Netherlands, its only factory in Western Europe, to local bus maker VDL Groep for 1 euro ($1.23), on condition that its 1,500 employees there do not lose their jobs.
The sale will allow Mitsubishi Motors to focus more on emerging markets, where growth is projected to be higher than in developed nations. The automaker has started new production lines in Indonesia and Thailand this year and is studying increasing production in China and Brazil.
"As a result of talks which prioritized the handover of all current employees of NedCar, we have basically agreed on this," Mitsubishi Motors said in a statement.
The euro-zone debt crisis and sagging consumer demand have made it tough for automakers including Mitsubishi Motors to remain profitable in Europe, leading to plants being sold off in the region.
The company decided in February to cease production by the end of this year at the Netherlands Car or NedCar plant, where it builds the Colt subcompact and the Outlander sport utility vehicle.
The plant accounted for less than 5 percent of Mitsubishi Motors' global output of 1.1 million vehicles in the year to last March. NedCar's output had slumped to 50,000 vehicles per year compared with a peak capacity of 200,000.
Mitsubishi Motors said it expects to lose about 28 billion yen ($352.33 million) on the deal, which is slated for completion by the end of December.
German premium carmaker BMW AG (BMWG.DE) said last month that it was considering building vehicles at the NedCar plant, and Japanese public broadcaster NHK reported earlier that VDL was set to start producing small cars at the plant for BMW. [ID:nWEA5282]
Mitsubishi Motors' statement made no reference to BMW.
NedCar, located in the southern town of Born near the borders with Belgium and Germany, started in 1991 as a three-way venture between Mitsubishi Motors, Volvo AB (VOLVb.ST) and the Dutch government. Mitsubishi Motors became the sole shareholder in 2001 after buying out its partners.
Mitsubishi Motors' sales in Europe reached 340,000 vehicles in 2007/08 but slipped to 218,000 in 2011/12.
Shares in Mitsubishi Motors were down 2.5 percent in afternoon trade at 77 yen, while the benchmark Nikkei 225 .N225 was down 0.6 percent.
(Reporting by Mayumi Negishi, Yoko Kubota and James Topham; Editing by Michael Watson and Chris Lewis)