German plants could be next.
Volkswagen is making difficult choices as it works to realign its operations amid financial challenges. Facing mounting pressure to cut costs, the automaker may even consider closing factories in Germany for the first time. Today, VW announced the sale of a factory and two test tracks in China, citing “economic reasons” for the decision.
The factory, operated in partnership with SAIC, is located in China’s Xinjiang region. Despite the sale, Volkswagen is deepening its collaboration with SAIC, planning to launch 18 new models by 2030 and extending their joint venture agreement until 2040. The first two electric vehicles under this partnership are set to debut as early as 2026.
The decision to sell the Xinjiang facility follows years of external pressure over alleged human rights abuses in the region. Rights organizations have reported forced labor involving the local Uyghur population, claims denied by both Beijing and Volkswagen, according to Nikkei Asia.
Earlier this week, VW Brand CEO Thomas Schäfer admitted that achieving the company’s goals might be impossible without closing at least one factory in Germany. Layoffs also seem likely, despite the company’s works council suggesting that wage reductions could prevent job cuts.
Volkswagen faces significant challenges, including rising costs, intensifying competition, and declining sales in key markets. While this combination is far from ideal, the company has a chance to turn things around with the right strategy—though it may require further plant closures down the line.
