"VOLKSWAGEN: OPENS TO SELL EXCESSIVE FACTORIES TO CHINA - FT
STOCKHOLM (News Agency Direkt) Volkswagen is opening up to sell the factories that the German automotive group has now been forced to put into abeyance due to the severe crisis that followed a decline in demand and increased competition from China, reports the Financial Times.
Executives at Volkswagen, which owns brands such as Audi, Seat, Skoda and Porsche, have told the Financial Times in interviews that they have no problem finding Chinese buyers for the factories where the company's redundant production lines are located in Europe.
The Chinese manufacturers highlighted as potential buyers are electric car producers - the very companies that have become increasing competition for European car manufacturers - who are seeking production facilities in Europe to circumvent EU tariffs.
The tariffs, which came into effect despite Germany voting against and Sweden abstaining, are seen as a levelling agent for competition as China's electric car companies receive heavy state subsidies from Beijing as they expand in Europe. The EU believes that the subsidies should be seen as illegal as they distort competition and disadvantage European-made cars, either by allowing Chinese cars to be equipped with better technology and sold for the same price as European cars or by dumping prices for cars with comparable technology.
However, German companies, which have invested heavily in or are owned by China, have expressed a completely different view on the matter. Alongside Volkswagen, Mercedes and BMW have also opposed the tariffs and instead spoke out in favor of free trade and welcomed competition from the East.
"It is absolutely conceivable (with Chinese owners of the factories that Volkswagen leaves, ed. note). Such a move would lower the entry barrier for these competitors and I believe in free trade," said Gernot Döllner, CEO of Audi.
China remains a crucial market for many non-Chinese automakers, and several companies other than Audi manufacture vehicles in China that are then imported back to Europe.
"Tariffs will only block competition for a limited time and give a false sense of security. We must keep up with developments," the CEO added.
Audi has already collaborated with Chinese MG manufacturer SAIC to produce electric cars in China tailored for the Chinese market – a type of collaboration that Gernot Döllner believes Chinese brands may also want to recreate in Europe.
In a separate interview, David Powels, chief financial officer of the Volkswagen car brand, said he also did not rule out the idea of letting Chinese automakers take over the vacant production lines.
"We are open to all kinds of discussions with any party. In a dynamic world, you have to keep all options open," he said.
After decades of China being Volkswagen's most profitable market, its market share has almost halved in the past five years. At the same time, the European market as a whole has weakened sharply, resulting in Volkswagen considering closing German factories for the first time in its history.
In December, an agreement was finally reached with the powerful IG Metall union on how to reduce production capacity across Germany to avoid the drastic measures that were on the table to close at least three factories in the country. The cuts mean that the Volkswagen brand, which accounts for about half of the group's sales volume, plans to reduce capacity by about 730,000 cars from around 1.5 million by 2030.
The overcapacity problem began to pile up during the pandemic, when Volkswagen began canceling night shifts as demand began to wane. The brand produced around 900,000 cars in Germany in 2024.
Volkswagen's factories must now meet new productivity targets to compete for remaining capacity. Those that don't meet the requirements could be considered for "alternative use," which could include sale.
Other European car manufacturers, who have expressed negative views about the Chinese competitor, have also acted in collaboration with their Chinese competitors to avoid politically sensitive closures. For example, the French-Italian-American Stellantis, which owns Fiat, Peugeot and Jeep, has taken a 20 percent stake in Chinese Leapmotor. The stake comes with exclusive rights for Stellantis to build and sell Leapmotor's cars outside of China via a joint venture. If Leapmotor's sales grow in Europe, Stellantis can use more of its excess capacity and thus avoid closing factories and laying off workers."
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