VOLKSWAGEN-GERMANY/ (EXCLUSIVE, PIX): According to a source, the automaker Volkswagen is planning to shut down production at two factories in Germany that are of interest to Chinese purchasers.
Source: China wants to establish a presence in Germany by purchasing factories.Volkswagen is willing to sell to a buyer in China, according to a source.
By Victoria Waldersee and John O'Donnell
Reuters, Frankfurt/Berlin, January 16 According to a person with knowledge of Chinese government thinking who spoke to Reuters, Chinese authorities and automakers are interested in German facilities that are scheduled to close, especially Volkswagen's locations.
According to the source, China might gain clout in Germany's coveted auto sector, which is home to some of the most venerable and established automakers, by purchasing a factory.
Even though Mercedes-Benz has two significant Chinese shareholders, Chinese businesses have made investments in Germany, the largest economy in Europe, in a variety of sectors, from robotics to telecommunications, but they have not yet established conventional auto manufacturing there.
China may make its most politically delicate investment to date if such a move is made. VW has long been a representation of Germany's industrial might, but it is currently in danger due to a slump in the global economy that is affecting demand and a sluggish shift to green technologies.
China's EV manufacturers could avoid paying EU tariffs on Chinese-imported electric vehicles by building cars in Germany for European markets, which could further hurt European manufacturers' ability to compete.
Chinese authorities reserve the power to approve specific foreign investments and would probably be involved in any offer from the beginning, even though bids could come from private enterprises, state-owned companies, or joint ventures with foreign businesses.
After an election in February, the incoming German government's attitude toward China will determine investment choices, the source said.
Due to investments and exports from German automakers to China, the economies of the two nations grew closely entwined during Angela Merkel's 16 years in government.
However, as the new coalition works to lessen reliance on China, ties have deteriorated. Chinese President Xi Jinping has been characterized as a "dictator" and a rival by Foreign Minister Annalena Baerbock.
According to a German foreign office source, China has developed into a systemic rival
In an effort to save costs and scale back its German operations, Volkswagen is looking at different uses for its facilities in Dresden and Osnabrueck. Sales of the largest carmaker in Europe, which owns the brands Skoda, Audi, and Porsche, have decreased as a result of increased competition from Chinese businesses.
Volkswagen executives sought to shut down many plants, but unions opposed their plans. In an agreement reached prior to Christmas, they decided to stop manufacturing of the electric ID.3 in Dresden, which employs 340 people, in 2025, and the T-Roc Cabrio in Osnabrueck, which employs 2,300 people, in 2027.
A source familiar with VW's thinking told Reuters that the corporation would be amenable to selling the Osnabrueck plant to a Chinese buyer.
"We're determined to identify the site's continued use. A spokeswoman declined to comment on specific rumors about an offer, but stated that the objective must be a workable solution that considers the interests of the business and employees.
According to the individual familiar with Chinese thinking, Chinese corporations are worried about how German unions, who hold half the seats on advisory boards of German enterprises, will react to them. German unions are looking for extensive site and employment assurances.
Workers at the facility would have nothing against producing for one of Volkswagen's joint venture partners in China, according to Stephan Soldanski, an Osnabrueck union representative.
"I can see us producing something for a joint venture in China... but with the VW logo and VW standards."
AIMING TO OPEN DOORS, CHINA
According to a spokesman for the Chinese foreign ministry, businesses should be permitted to invest in Germany.
"To open up new economic prospects for international corporations, China has implemented a number of opening-up policies... The official told Reuters, "It is hoped that the German side will also maintain an open mind, (and) provide a fair, just, and non-discriminatory business environment for Chinese firms to invest."
Due to the sensitive nature of the subject, the source with knowledge of Chinese government thinking who spoke to Reuters under the condition of anonymity refused to identify individual possible investors.
According to a financier acquainted with the automaker, selling factories could be less expensive for VW than shutting them down completely. Each factory could bring between 100 million and 300 million euros ($103 million and $309 million).
Volkswagen remained silent regarding the assets' worth.
VW supervisory board member and Lower Saxony premier Stephan Weil chose not to comment.
Volkswagen executives sought to shut down many plants, but unions opposed their plans. In an agreement reached prior to Christmas, they decided to stop manufacturing of the electric ID.3 in Dresden, which employs 340 people, in 2025, and the T-Roc Cabrio in Osnabrueck, which employs 2,300 people, in 2027.
A source familiar with VW's thinking told Reuters that the corporation would be amenable to selling the Osnabrueck plant to a Chinese buyer.
"We're determined to identify the site's continued use. A spokeswoman declined to comment on specific rumors about an offer, but stated that the objective must be a workable solution that considers the interests of the business and employees.
According to the individual familiar with Chinese thinking, Chinese corporations are worried about how German unions, who hold half the seats on advisory boards of German enterprises, will react to them. German unions are looking for extensive site and employment assurances.
Workers at the facility would have nothing against producing for one of Volkswagen's joint venture partners in China, according to Stephan Soldanski, an Osnabrueck union representative.
"I can see us producing something for a joint venture in China... but with the VW logo and VW standards."
AIMING TO OPEN DOORS, CHINA
According to a spokesman for the Chinese foreign ministry, businesses should be permitted to invest in Germany.
"To open up new economic prospects for international corporations, China has implemented a number of opening-up policies... The official told Reuters, "It is hoped that the German side will also maintain an open mind, (and) provide a fair, just, and non-discriminatory business environment for Chinese firms to invest."
Due to the sensitive nature of the subject, the source with knowledge of Chinese government thinking who spoke to Reuters under the condition of anonymity refused to identify individual possible investors.
According to a financier acquainted with the automaker, selling factories could be less expensive for VW than shutting them down completely. Each factory could bring between 100 million and 300 million euros ($103 million and $309 million).
Volkswagen remained silent regarding the assets' worth.
VW supervisory board member and Lower Saxony premier Stephan Weil chose not to comment.
EV MAKERS SCOUT LOCATIONS CHINA
In order to get around tariffs imposed by the European Commission last year to combat what it claimed were unfair subsidies in China, numerous Chinese automakers are looking for sites for facilities in Europe, the second-largest EV market in the world.
To date, the majority have chosen to establish new factories in nations with cheaper labor costs and weaker trade unions, as BYD in Turkey and Hungary. Chery Auto will begin producing EVs this year in a plant that was previously held by Nissan in Spain, while Leapmotor plans to begin production with Stellantis in Poland.
A further source connected with the talks claims that Chinese investors have previously inspected plants in western Europe, such as Volkswagen's Audi facility in Brussels and Ford's Saarlouis plant in Germany.
In order to get around tariffs imposed by the European Commission last year to combat what it claimed were unfair subsidies in China, numerous Chinese automakers are looking for sites for facilities in Europe, the second-largest EV market in the world.
To date, the majority have chosen to establish new factories in nations with cheaper labor costs and weaker trade unions, as BYD in Turkey and Hungary. Chery Auto will begin producing EVs this year in a plant that was previously held by Nissan in Spain, while Leapmotor plans to begin production with Stellantis in Poland.
A further source connected with the talks claims that Chinese investors have previously inspected plants in western Europe, such as Volkswagen's Audi facility in Brussels and Ford's Saarlouis plant in Germany.
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