According to a source from Reuters, the acquisition of Volkswagen’s manufacturing facilities in Germany would not only provide China with an opportunity to produce cars right in the heart of Europe’s prestigious automotive industry but also help strengthen the position of Chinese electric vehicle (EV) manufacturers in the region.
“Key” to Unlock the European Market
Experts suggest that if Chinese EV companies manufacture cars in Germany, they could avoid import taxes imposed by the European Union, increasing competitive pressure on local manufacturers. This is a strategic move to boost China’s influence in a sector that has long been a point of pride for Germany.
While China has invested in many industries in Germany, ranging from telecommunications to robotics, establishing a traditional car manufacturing base has remained an “unrealized dream,” despite the fact that two major shareholders of Mercedes-Benz are Chinese.
If this deal succeeds, China could make a significant breakthrough.
Volkswagen – a longstanding symbol of Germany’s industrial might – is currently facing pressure from a global sales decline and the transition to green technologies.
In fact, Volkswagen, Europe’s largest automaker, is exploring ways to repurpose factories in Dresden and Osnabrueck to cut costs. The company, which owns brands like Porsche, Audi, and Skoda, is under increasing competition from Chinese rivals.
As part of its restructuring efforts, Volkswagen plans to cease production at the Dresden plant (340 employees) by 2025 and at the Osnabrueck plant (2,300 employees) by 2027. This is part of a broader initiative to reduce costs and improve competitiveness.
A source from Volkswagen stated that the company is open to selling the Osnabrueck plant to a Chinese company if an appropriate offer arises.
A spokesperson for the company confirmed: “We are committed to finding a solution that allows continued use of the site while safeguarding the interests of both the company and the workforce.”
However, Chinese companies are concerned about the stance of German trade unions – which hold half the seats on the boards of German companies and typically demand job and production site guarantees.
Stephan Soldanski, a union representative at Osnabrueck, said: “We don’t oppose production for a joint venture with Volkswagen in China, but the prerequisite is that everything must meet VW’s standards and branding.”
From China’s side, the China Chamber of Commerce in Berlin confirmed that Chinese investors are very interested in Germany’s automotive industry, viewing it as a strategic long-term investment opportunity. They also noted that winning over German consumers – who have high expectations – would be a significant milestone for Chinese carmakers.
China’s Ministry of Foreign Affairs has also sent a clear message to Germany, urging it to create a conducive environment for companies wishing to invest in the country.
“China has implemented numerous opening-up policies to create new business opportunities for foreign enterprises. We hope Germany will maintain an open attitude and provide a fair, transparent, and non-discriminatory business environment for Chinese companies,” a representative of the Chinese Ministry of Foreign Affairs told Reuters.
Strategic Choice
Amid restructuring and competitive pressure, Volkswagen is considering selling several factories, valued between €100 million and €300 million (roughly $103 million to $309 million). A banking expert mentioned that selling the plant would be less costly than shutting it down entirely.
Although Volkswagen declined to comment on the value of these assets, this could present an opportunity for Chinese investors to quickly enter the European market without having to build new factories.
Many Chinese car manufacturers are currently seeking locations to build factories in Europe, the world’s second-largest EV market.
While companies like BYD are opting to set up factories in lower-cost countries like Hungary and Turkey, others are considering entering the European market by acquiring older plants.
Leapmotor is collaborating with Stellantis to manufacture cars in Poland, while Chery Auto plans to launch its EV production line later this year at a former Nissan plant in Spain.
Additionally, Chinese investors are actively surveying Western Europe, including Ford’s plant in Saarlouis (Germany) and Audi’s facility in Brussels (Belgium).
Chery Auto has been exploring several options and is expected to make a decision this year. A Chery representative in Europe emphasized that buying an existing plant could be a quick solution, but building a new one would allow them to meet the highest technological standards.
BYD, with its ambitious goals in the European market, stated that its long-term development strategy remains largely unaffected by short-term political fluctuations in individual countries.
Meanwhile, SAIC – a major joint venture partner of Volkswagen – has not yet made any comments regarding its expansion plans in the region.
