Chinese interested in buying VW factories in Germany

Chinese officials and automakers are eyeing German factories slated for closure and are particularly interested in Volkswagen's sites, a person with knowledge of Chinese government thinking told Reuters. Buying a factory would allow China to build influence in Germany's prized auto industry, home to some of the oldest and most prestigious car brands, the person said.

Chinese companies have invested across a range of industries in Germany, Europe's biggest economy, from telecommunications to robotics but have yet to set up traditional car manufacturing there, despite Mercedes-Benz having two large Chinese shareholders. Any such move could mark China's most politically sensitive investment yet, as VW has long been a symbol of Germany's industrial prowess, Reuters reports.

Building cars in Germany for sale in Europe would allow China's EV makers to avoid paying EU tariffs on electric cars imported from China and could pose a further threat to European manufacturers' competitiveness.

Investment decisions would hinge on the new German government's stance towards China following an election in February, the source said. The two countries' economies became deeply intertwined during Angela Merkel's 16 years in office, fueled by investments and exports from German carmakers to China. But relations have cooled as the current coalition pushes to reduce dependence on China.

Chinese officials point out that they want open access for investments in Germany. Selling factories could be cheaper for VW than closing plants altogether, said a banker familiar with the carmaker, adding they could fetch 100 million euros-300 million euros each.

Many Chinese car makers are scouting locations for plants in Europe, the world's second-largest EV market, to circumvent tariffs imposed by the European Commission last year to counter what it said were unfair subsidies in China. Most have so far opted to build new factories in lower-cost countries with weaker trade unions, such as BYD in Hungary and Turkey.

Volkswagen

Mercedes Benz

Angela Merkel

plan of China to buy Volkswagen factory in Germany