Volkswagen will sell one of its plants in China

Volkswagen, which cooperates with SAIC, will sell its plant in China's Xinjiang. The buyer will be a division of Shanghai Motor Vehicle Inspection Certification (SMVIC), a state-owned company. This was reported by Reuters on November 27, citing two sources. Under the terms of the deal, details of which were not disclosed, SMVIC will also receive several test sites.

According to the sources, the deal will be mutually beneficial for both joint venture partners, as it will eliminate Volkswagen's reputational problem and ease tensions in its relations with SAIC amid the struggle for the Chinese auto market.

An indirect reason for the plant sale is said to be investor pressure on the carmaker to leave Xinjiang, with human rights organizations there claiming violations, including forced labor in prison camps, have been uncovered. Another complication has been the fallout from a potential trade war between Beijing and the European Union after the EU imposed import duties on Chinese-made electric cars.

The Xinjiang plant, which opened in 2013 and produced Volkswagen Santana cars, has lost its importance to the manufacturer in recent years. After the job cuts, about 200 employees remained on it, who were engaged in final quality checks and handed over cars to dealers. The plant has a capacity of 50,000 cars per year and has not produced a single car since 2019.

Earlier this year, the Volkswagen-SAIC joint venture announced that it plans to produce 18 new models by 2030 in China.

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