Volkswagen is now pulling out of Xinjiang province after several years of criticism. Together with the group's Chinese partner, SAIC, the Germans are selling a factory in the country.
Volkswagen and the car brand's Chinese partner, the SAIC group, have decided to sell their car factory in Xinjiang province in China.
The decision marks the end of the German presence in the area. Something that Volkswagen has been criticized for for years.
The factory has been the subject of attention from investors and human rights groups who have pointed to alleged abuses in the region, including the use of forced labor in internment camps. Accusations which the Communist regime in Beijing has denied.
Reuters writes that.
Volkswagen announced on Wednesday that the factory is being sold to a buyer owned by Shanghai's local government. The buyer is Shanghai Motor Vehicle Inspection Certification (SMVIC), which is part of the state-owned Shanghai Lingang Development Group.
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The sale also includes testing facilities in Turpan, Xinjiang, as well as in Anting, Shanghai. It is stated that all employees at the factory will be taken over by the new owner.
The factory, which previously produced the Volkswagen Santana model, has lost importance for the car manufacturer in recent years.
Production was scaled back and activities limited to quality control and the delivery of cars to local dealers. Details of the financial value of the transaction have not been disclosed.
Volkswagen has repeatedly denied that the decision to maintain operations in Xinjiang was previously a requirement from Chinese authorities in order to operate in the rest of the country.
China is Volkswagen's largest market, but the automaker has experienced declining sales and increasing competition in the country. In particular, the Chinese manufacturer BYD has overtaken Volkswagen as the best-selling car brand in China.
The sale of the plant in Xinjiang comes at the same time that Volkswagen and SAIC have extended their cooperation until 2040. They plan to introduce 18 new models by 2030, including two extended-range models adapted to Chinese consumers, which will be launched in 2026.
Volkswagen is also collaborating with other Chinese partners such as Xpeng to develop new electric and hybrid models, with the goal of over 30 new models by 2030.
European carmakers, including Volkswagen, are currently facing potential trade disputes between the EU and China.
The EU has introduced anti-subsidy tariffs on Chinese-produced electric cars, which could affect sales. The sale of the factory in Xinjiang can therefore also be seen as part of a wider strategy to restructure the activities in China and deal with both economic and political challenges.
