Volkswagen has sold a plant in China: what does this mean for the company?

Illustrative photo. ID.UX - Volkswagen sub-brand in China. Source: Volkswagen

Volkswagen has announced the sale of its plant in China's Xinjiang region. Along with the production base, the auto giant has lost two test sites. This is part of a wider change caused by financial difficulties. Earlier, the company's management even suggested that for the first time in history it might close some plants in Germany.

Here's What We Know

Volkswagen has decided to sell the plant, which operated as part of a joint venture with China's SAIC. This decision coincided with the announcement of an expanded partnership with SAIC: the companies promise to produce 18 new models by 2030, among which the first two electric cars should appear as early as 2026. In addition, the parties have extended the co-operation agreement until 2040.

The decision to sell the plant in Xinjiang was not without scandals. According to Nikkei Asia, VW has long been under pressure from human rights organisations, which accused the regional authorities of violating the rights of Uighurs, including the use of forced labour. Officially, Volkswagen and Chinese authorities deny these accusations.

What comes next.

Volkswagen faces rising costs, fierce competition and declining sales in key markets. The company's problems aren't limited to China. Earlier this week, Volkswagen brand CEO Thomas Schafer said that VW won't be able to meet its goals without closing at least one plant in Germany. At the same time, the company's works council believes the carmaker can avoid layoffs by cutting wages.

Source: Nikkei Asia