by Volkswagen closes plant in China
Volkswagen has confirmed the closure of its joint venture with SAIC in Nanjing, China. This plant, which operated for 17 years, had a capacity of 360 thousand cars per year. It produced the VW Passat and Skoda models. The decision to close is related to the drop in demand for internal combustion engine (ICE) cars and a low level of utilization of production capacity.
News of the closure first appeared in the German press, after which the company officially confirmed the decision. The plant will be closed gradually during the second half of the year. In a statement to Reuters, Volkswagen noted:
We confirm that production at the SVW plant in Nanjing has been discontinued. Many Volkswagen plants are now being converted or have already been retooled for the production of electric vehicles.
State of production at Volkswagen
The plant in Nanjing has long been under threat of closure due to falling sales of ICE cars in the region. Volkswagen has 39 plants worldwide, employing over 90 thousand people, but their utilization has significantly decreased after the COVID-19 pandemic. For example, the capacity of the joint venture with SAIC was used only at 58% of the possible 2.1 million cars per year.
The company did not specify whether the former plant in Nanjing will be repurposed for electric vehicle production, although some of its other enterprises have already undergone such modernization. This decision is part of Volkswagen’s global strategy, which involves a transition to electric vehicles and optimization of production processes due to changes in the market.
