Volkswagen open to Chinese rivals taking over excess production lines in Europe
German group is scaling down manufacturing as it struggles with falling demand and shift to electric vehicles
Volkswagen is open to allowing Chinese carmakers to take over its excess production lines in Europe, as it grapples with falling demand and rising competition from the very same companies eyeing its factories.
Executives at Audi and VW’s eponymous flagship brand told the Financial Times that partnering with Chinese makers of EVs, which are looking to expand their footprint in Europe, was one option to address declining sales in the region.
“For sure, that is thinkable,” said Gernot Döllner, chief executive of Audi. Such a move would “lower the entrance barrier of these competitors”, adding: “I believe in free trade.”
Audi has partnered with MG-maker SAIC to build EVs in China that appeal to local consumers — a type of collaboration that Döllner said Chinese brands might also seek to recreate in Europe.
In a separate interview, David Powels, chief financial officer at the VW brand, would also not rule out the idea of Chinese carmakers taking over idle production lines at the company’s German plants.
“We’re open for any discussion on any topic with any partner,” he said. “In a dynamic world, you have to keep all options open.”
The comments come as Europe’s legacy carmakers race to shift to EVs, a segment where Chinese brands such as BYD are producing what are considered more technologically advanced vehicles, helped both by subsidies from Beijing and a lower cost base.
For decades, China was VW’s most profitable market but in the past five years, the market share of its flagship brand has nearly halved due to its weak position in the rapidly growing battery-run vehicle market.
Europe’s largest carmaker has also been hit hard by the shrinking automotive market in its home region, where 2mn fewer cars were sold last year compared with five years earlier.
Last month, VW reached an agreement with workers at its flagship brand to scale back production capacity across Germany, avoiding a more drastic plan that would have involved closing at least three plants in the country.
The closure of production lines means that the VW brand — which accounts for roughly half of the group’s sales by volume — was set to reduce its annual capacity by roughly 730,000 cars from about 1.5mn by 2030, the carmaker said.
Excess capacity started to rise during the pandemic when VW began cancelling night shifts due to lower demand, with the brand producing about 900,000 cars in Germany in 2024.
VW’s plants will have to reach new undisclosed productivity targets to fight for remaining capacity, and those unable to meet them will be considered for “alternative use” — which could include being put up for sale.
Some Chinese carmakers see using excess production capacity in Europe as a way to enhance their presence in the bloc.
Stellantis, for example, has taken a 20 per cent stake in Chinese start-up Leapmotor, giving it exclusive rights to build and sell Leapmotor cars outside China through a joint venture. If Leapmotor sales grow in Europe, Stellantis could utilise more spare capacity at its own factories and avoid politically controversial closures.
Döllner said that Audi was also opposed to the EU’s higher tariffs on Chinese-imported EVs, saying the protectionist measures would ultimately hurt its position.
China remains a crucial market for many non-Chinese carmakers, while several companies including Audi, manufacture vehicles in the country and then import them back into Europe.
“Tariffs will only block [competition] for some time and give you a wrong [sense of] security. We have to keep pace,” Döllner added.