Volkswagen may close its Nanjing factory in China

Around 360,000 Volkswagen and Skoda cars may stop being assembled in 2025

Volkswagen may close its Chinese factory in Nanjing

Photo by: Volkswagen

By: Eleonora Lilli

Published by: Brian Potter

Sep 19, 2024 at 4:24am ET

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The Volkswagen Group and SAIC factory in Nanjing, China, could close. There is no exact date for the end of production but, according to a source close to the company and remaining anonymous, it could stop assembling around 360,000 Volkswagen (including the Passat) and Skoda brand cars a year as early as 2025.

According to Automotive News Europe this might not even be the only Group plant to close in China, due to the slowdown in demand for internal combustion engine cars in the local market. The final decisions, however, have yet to be made.

The official response

"All SAIC Volkswagen factories are operating normally according to market requirements and our forecasts," Volkswagen China said in an e-mail response to questions from Bloomberg News.

Some numbers are reported by Automotive News Europe: production at Volkswagen's 39 Chinese plants last year remained more than a quarter below its pre-pandemic peak. Its share of operating profits from Chinese ventures fell by 20 per cent in 2023 to €2.62 billion and is down by about half from its 2015 high point.

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What's happening in Europe

While in China the Volkswagen Group has to reorganise production, which is too tied to conventionally powered vehicles, because demand for electric cars is high; in Europe the situation is the opposite. Agreements with the trade unions have been broken in order to start redundancies from June 2025 at various plants.

The issue is still open, however, and it will not be easy to resolve. "Negotiations are necessary," said Daniela Cavallo, chairwoman of the German manufacturer's works council, "Otherwise Volkswagen will be able to proceed with forced redundancies from the summer of 2025, but at the same time it would immediately face huge cost increases for all those who remain.