VW closes first factory in China

Volkswagen and SAIC close their joint plant in Nanjing, China. Production has already come to a standstill. In Nanjing, the partners had mainly built combustion models such as the VW Passat and Skoda Superb. Production is now moving to a nearby plant.

There had already been rumours last year about the closure of the plant in Nanjing. The German business paper Handelsblatt initially reported on the plant’s closure, but the information has since been confirmed by the German Group to the German publication Automobilwoche.

This is a first: never before has VW closed a plant in China. Although the Group has withdrawn from the controversial Xinjiang plant in the Uyghur region, the site was sold and not closed. And although production at part of SAIC-Volkswagen’s Anting plant has been discontinued, the site is still being used as a research and development centre.

The production facility in Nanjing, which only opened in 2008, was originally designed for an annual capacity of 360,000 vehicles. Most recently, the VW Passat combustion engine and the Skoda Superb, among others, rolled off the production line there. However, this was at a significantly lower capacity than the plant, not far from the city centre, would allow.

As the Handelsblatt writes, citing several people familiar with the events, the location close to the city centre may have been a problem in addition to the low demand. Due to the densely populated area, logistical connections were difficult, and conversions were also difficult. A transformation to e-car production would therefore have been costly and inefficient. The aim is apparently to return the site to the city.

Even without production in Nanjing, Volkswagen still operates around 40 vehicle and component plants in China, whose capacity far exceeds current demand. Production of the Passat and Superb will probably move to Yizheng, around 70 kilometres away. It remains to be seen how many of the 2,500 employees in Nanjing will also move to the new plant or whether the capacities and personnel in Yizheng are already sufficient. “It is conceivable that employees will find new jobs with up-and-coming Chinese brands. The well-trained Volkswagen employees are likely to be in demand from new players on the market,” writes Automobilwoche, for example.

handelsblatt.com, automobilwoche.de (both in German)