Volkswagen-SAIC could close production site in China

Due to weak demand for cars with combustion engines, Volkswagen and its partner SAIC could close a factory in China. In the US, the carmaker has had to pause the production of the ID.4., while there is good news from Brussels.

Sales of ICE cars are dropping in the country, while so-called new energy vehicles (NEVs) dominate sales charts. Around 1.1 NEVs were sold in China in August, with the NEV share reaching almost 45 per cent

The question remains how the carmaker will meet the growing demand for electric cars. The question remains: can Volkswagen make up for lost time? In 2018, VW was still able to post an operating profit of over 4.6 billion euros from its China joint ventures with FAW and SAIC on its balance sheet. In the first half of 2024, it was less than one billion euros, almost a third less than in the same period in 2023.

As the Groups sells less and less combutions engines in China, it might clode the Nanjing plant. The production of the Passat family could be moved to another factory, an insider told the news agency Reuters. But there is no timetable yet. And the closure is not set in stone. Bloomberg, which first reported on the move, writes that the plant could close as early as next year. Other people familiar with the matter told the news agency that the plant was not up for discussion.

Either way, VW and its partner SAIC are considering cutting production of its combustion engine vehicles in China, which shows the German carmaker’s predicament. According to a statement from VW China sent to Bloomberg, the carmaker is “also transforming vehicle production and the components plants step by step.” However, the news agency also notes that VW’s reassessment of its “Chinese footprint as it weighs plant closures at home, [highlights] the complex challenges the company must navigate to stay ahead of a perilous and uneven global transition away from fossil-fuel vehicles.”

There is light at the end of the tunnel for the German manufacturer. The Volkswagen Group saw a 45 per cent increase of electric cars in China in the first half of 2024, demonstrating how important the market is. Especially as demand in dropping in Europe.

And it has repeatedly emphasised its “In China, for China” strategy. Future vehicles will not only be built in China, but also developed there using local technologies to meet customer requirements – hence, for example, the partnership with Xpeng. One of the main goals is to achieve cost parity with local BEV competitors for entry-level compact models by 2026.

In July, VW and SAIC signed a series of technical cooperation agreements for new products as part of their Chinese joint venture. These include the development of two all-electric models and three plug-in hybrid models in China and Germany, which will launch from 2026. Audi and SAIC will allegedly present their first jointly developed model in November.

Recall campaign in the US

There are also problems at a Volkswagen Group plant in the US. VW is temporarily suspending production of the ID.4 electric car model in Chattanooga (Tennessee) and is placing around 200 employees at the plant on leave from 23 September. This comes after a major recall and sales stop for the ID.4 due to potentially defective door handles, which can cause the doors to open while driving.

According to the National Highway Traffic Safety Administration (NHTSA), water can penetrate the electronic door handles, short-circuit the circuit board and open the doors while driving. So far, there is no solution to the problem. “After extensive review, in response to the stop-sale of the ID.4, we will temporarily suspend production of the vehicle at the Volkswagen Chattanooga plant until a remedy is available,” a Volkswagen spokesperson told The Drive.

The spokesperson also emphasised: “This disruption in no way changes our commitment to the ID.4 and our growing BEV portfolio. The ID.4 remains one of America’s best-selling electric vehicles.”

Nio could take over Audi factory in Brussels

There seems to be good news from Belgium. As reported, the Audi factory in Brussels could also be closed. After all, it only manufactures the Q8 e-tron and the next generation of the latter will come from Mexico, leaving the Brussels plant nothing to produce.

Audi has been looking for an investor and might now have found one: Nio. According to local media reports, the latter has been visiting the factory in recent weeks and “is now working on a bid, which must be submitted to the Volkswagen Group by next Monday at the latest.”

bnnbloomberg.ca, reuters.com (both China),thedrive.com (USA), tijd.be (Brussels)