[News] Chinese Automakers Eye Acquisition of Volkswagen’s Closing Factories in Germany to Avoid EU Tariffs

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According to a report from MyDrivers, citing Reuters, sources suggest that Chinese automakers are closely monitoring Volkswagen Group’s plans to shut down its factories in Germany. Acquiring one of these facilities could offer Chinese carmakers a valuable opportunity to enhance their presence within Germany’s renowned automotive industry, as highlighted in the report.

The report also emphasizes that producing vehicles in Germany and selling them within Europe would enable Chinese electric vehicle manufacturers to bypass EU tariffs, thereby boosting the competitiveness of Chinese cars in the European market.

EU Tariffs on BEV Imports from China

On October 29 2024, the European Commission concluded its anti-subsidy investigation and imposed definitive countervailing duties on imports of battery electric vehicles (BEVs) from China for a period of five years.

Different automakers are subject to varying tariff rates: BYD faces a rate of 17.0%; Geely, 18.8%; SAIC, 35.3%. Other cooperative companies are charged 20.7%, while non-cooperative companies face the highest rate of 35.3%, as the report notes.

Chinese carmakers’ investment decisions regarding Volkswagen Group’s factories may hinge on Germany’s stance toward China following German’s February elections. The report indicates that potential bids could come from private enterprises, state-owned companies, or joint ventures.

Currently, Chinese automakers often choose to establish new factories in countries with lower labor costs, as highlighted by the report. For example, BYD is expanding its operations in Hungary and Turkey, Leapmotor is collaborating with Stellantis to plan production in Poland, and Chery Auto will begin manufacturing electric vehicles this year at a facility in Spain that was previously owned by Nissan.

Chinese companies have made significant investments across various industries in Germany, including telecommunications and robotics. However, they have yet to set up traditional car manufacturing in the country, despite Mercedes-Benz having two major Chinese shareholders, as the report notes.

Volkswagen’s Decision of Closing Plants

Meanwhile, Volkswagen is exploring alternative uses for its factories in Dresden and Osnabrück as part of a cost-cutting initiative aimed at streamlining its German operations. The automaker, which owns renowned brands such as Porsche, Audi, and Skoda, has been grappling with declining sales due to intensifying competition from Chinese companies, as noted in the report.

Initially, Volkswagen executives proposed closing the plants, but they faced strong resistance from labor unions, as the report indicates. A compromise was eventually reached, stating that production at the Dresden factory will cease in 2025, followed by the closure of the Osnabrück facility in 2027.

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(Photo credit: Volkswagen)