Chinese firms eye VW’s struggling German plants – report

Chinese investors and officials are considering purchasing German automotive factories that are on the brink of closure, with a particular focus on those owned by Volkswagen, reported Reuters.

This move could potentially bolster China's presence in the German auto industry. Volkswagen is currently grappling with the challenges posed by a global economic downturn and the shift towards sustainable technologies.

The acquisition of German factories would enable Chinese electric vehicle (EV) manufacturers to sidestep tariffs imposed

by the European Union on EV imports from China. Bidders for the German facilities could include private firms, state-owned entities, or partnerships with international companies, the report said.

However, the Chinese government retains the authority to approve or deny overseas investments, with decisions likely influenced by the position of the newly elected German government on China.

Volkswagen is considering repurposing its factories located in Dresden and Osnabrueck in Germany as part of a cost-saving initiative to streamline its operations.

Despite a decline in sales amidst rising competition from Chinese firms, the automaker has faced opposition from unions in its bid to shut down several plants.

However, agreements have been reached last month to cease production at the Volkswagen’s Dresden and Osnabrueck sites by 2025 and 2027, respectively.

A person familiar with the matter told the news agency that Volkswagen is open to sell its facility in Osnabrueck to a Chinese buyer.

A spokesperson said: “We are committed to finding a continued use for the site. The goal must be a viable solution that takes into account the interests of the company and employees.”

A banker familiar with Volkswagen told Reuters that selling the factories could be more cost-effective for the carmaker than closing them, with potential sale prices ranging from €100m($103m) to €300m for each facility.

Chinese carmakers are actively exploring European locations for new manufacturing plants to avoid tariffs.

Companies such as BYD and Leapmotor have chosen to establish operations in countries with more favourable conditions, such as Hungary, Turkey, and Poland, while Chery Auto is set to commence EV production in a former Nissan plant in Spain.

Separate sources indicated that Chinese investors have also considered plants in Western Europe, including Ford's facility in Saarlouis, Germany, and Volkswagen's Audi plant in Brussels.

"Chinese firms eye VW’s struggling German plants – report" was originally created and published by Just Auto, a GlobalData owned brand.