Volkswagen is contemplating factory closures in China as part of a cost-cutting initiative. The German automaker is considering relocating the production of its Passat models due to declining demand for combustion engine vehicles.
According to insiders, Volkswagen and its Chinese partner SAIC are considering closing a factory in China due to dwindling demand for vehicles with internal combustion engines. A person familiar with the matter told Reuters on Wednesday that the production of Passat models would be moved from Nanjing to another nearby factory.
Volkswagen declined to comment on the issue, and SAIC was not immediately available for comment. The insider further stated that some of the employees from Nanjing would also transfer to the other plant. However, there is no timeline yet, and it remains unclear whether the Nanjing factory would be closed or sold.
Reviving Skoda brand in China
Independently of the potential factory closure, the two automakers are considering ways to revitalize sales of the “Skoda” brand. Currently, Skoda accounts for only one percent of the joint venture SAIC-VW’s sales. In 2017, its share was 17 percent.
The news agency Bloomberg initially reported on planned factory closures. However, two other insiders emphasized that the Ningbo plant, which was rumored to be at risk of closure, is not under consideration for shutdown.
Volkswagen has long been the most successful vehicle manufacturer in China. However, due to growing domestic and foreign competition, its market share has recently declined.
