Unique-Chinese language consumers interested by undesirable German Volkswagen factories, supply says

By John O’Donnell and Victoria Waldersee

FRANKFURT/BERLIN (Reuters) – Chinese language officers and automakers are eyeing German factories slated for closure and are notably interested by Volkswagen (ETR:VOWG_p)’s websites, an individual with information of Chinese language authorities considering advised Reuters.

Shopping for a manufacturing unit would enable China to construct affect in Germany’s prized auto trade, house to a number of the oldest and most prestigious automobile manufacturers, the particular person mentioned.

Chinese language firms have invested throughout a spread of industries in Europe’s largest economic system, from telecommunications to robotics, however have but to arrange conventional automobile manufacturing there regardless of Mercedes-Benz (OTC:MBGAF) having two giant Chinese language shareholders.

Any such transfer may mark China’s most politically delicate funding but. VW has lengthy been an emblem of Germany’s industrial prowess, now threatened by a world financial slowdown hitting demand and creaking transition to inexperienced applied sciences.

Constructing vehicles in Germany on the market in Europe would enable China’s EV makers to keep away from paying EU tariffs on electrical vehicles imported from China and will pose an extra menace to European producers’ competitiveness.

   Whereas bids may come from personal firms, state-owned companies or joint ventures with overseas gamers, Chinese language authorities reserve the proper to approve sure investments overseas and are more likely to be concerned in any supply from early within the course of.

Funding selections would hinge on the brand new German authorities’s stance in direction of China after an election in February, the particular person mentioned.

The 2 economies grew to become deeply intertwined throughout Angela Merkel’s 16 years in workplace, fuelled by investments and exports from German carmakers to China.

However relations have cooled as the present coalition pushes to cut back dependence on China. International Minister Annalena Baerbock has described President Xi Jinping as a “dictator”, and China as a rival.

A supply from Germany’s overseas workplace mentioned China had developed to change into a systemic rival.

Volkswagen is exploring various makes use of for its Dresden and Osnabrueck factories underneath a cost-cutting drive to pare again its German operations. Europe’s largest automaker, which owns manufacturers together with Porsche, Audi and Skoda, has suffered a fall in gross sales within the face of rising competitors from Chinese language firms.

VW executives needed to shut a number of vegetation however confronted resistance from unions. In a deal struck earlier than Christmas they agreed to finish manufacturing in Dresden, a 340-worker plant making the electrical ID.3, from 2025, and Osnabrueck, the place 2,300 staff produce the T-Roc Cabrio, from 2027.

VW can be open to promoting the Osnabrueck manufacturing unit to a Chinese language purchaser, an individual conversant in the corporate’s considering advised Reuters.

“We’re dedicated to discovering a continued use for the positioning. The aim have to be a viable resolution that takes into consideration the pursuits of the corporate and staff,” a spokesperson mentioned, declining to remark particularly on hypothesis about a proposal.

Chinese language firms are involved about how they might be obtained by German unions, which maintain half the seats on German firms’ advisory boards and search far-reaching web site and job ensures, the particular person conversant in China’s considering mentioned.

Stephan Soldanski, a union consultant from Osnabrueck, mentioned staff on the plant would don’t have anything towards producing for considered one of Volkswagen’s China-based three way partnership companions.

“I may think about that we’d produce one thing for a China three way partnership …. however underneath the VW emblem and underneath VW requirements. That’s the key situation,” he mentioned.

CHINA SEEKS TO OPEN DOORS

A Chinese language overseas ministry spokesperson mentioned firms that need to put money into Germany must be allowed to take action.

“China has launched a collection of opening-up measures to create new enterprise alternatives for overseas firms … It’s hoped that the German facet may even uphold an open thoughts, (and) present a good, simply and non-discriminatory enterprise setting for Chinese language corporations to speculate,” the spokesperson mentioned in a press release to Reuters.

The supply with information of Chinese language authorities considering, who spoke to Reuters on situation of anonymity due to the sensitivity of the matter, declined to call particular potential buyers.

Requested in regards to the particular person’s feedback, China’s chamber of commerce in Berlin confirmed that Chinese language buyers had been strongly interested by Germany’s automobile sector, viewing it as a strategically vital long-term funding prospect.

Many Chinese language carmakers consider that successful over Germany’s demanding customers is a key marker of success, they added.

Promoting factories could possibly be cheaper for VW than closing vegetation, mentioned a banker conversant in the carmaker, including that they may fetch between 100 million euros and 300 million euros ($103 million to $309 million) every.

Volkswagen didn’t touch upon the worth of the property.

Stephan Weil, premier of Decrease Saxony and supervisory board member at VW, declined to remark.

CHINA EV MAKERS SCOUT LOCATIONS

Many Chinese language carmakers are scouting areas for vegetation in Europe, the world’s second-largest EV market, to avoid tariffs imposed by the European Fee final 12 months to counter what it mentioned had been unfair subsidies in China.

Most have to date opted to construct new factories in lower-cost nations with weaker commerce unions, reminiscent of BYD (SZ:002594) in Hungary and Turkey. Leapmotor (HK:9863) is planning manufacturing with Stellantis (NYSE:STLA) in Poland and Chery Auto will begin making EVs this 12 months at a plant previously owned by Nissan (OTC:NSANY) in Spain.

Chinese language buyers have already surveyed vegetation in western Europe, in response to a separate supply conversant in these discussions, together with Ford (NYSE:F)’s plant in Saarlouis in Germany and Volkswagen’s Audi plant in Brussels.

Sources advised Reuters in November that Leapmotor was contemplating utilizing a plant in Germany for EV manufacturing.

Chery advised Reuters it’s numerous choices for manufacturing in Europe and expects to decide this 12 months.

Its prime European govt advised Reuters final October that whereas it will be faster to purchase an current plant, a brand new plant would enable Chery to construct to the most recent requirements.

BYD advised Reuters it has long-term European targets which are largely unbiased of short-term nationwide politics.

($1 = 0.9677 euros)