Volkswagen Group confirmed it has agreed to sell its stake in a controversial plant in China’s Xinjiang Autonomous Region to a Shanghai government-owned entity.
The German automaker had been under pressure to exit the region, where widespread human rights abuses and including forced labor in mass detention camps have been documented – claims that the Chinese government has denied.
Go deeper with GlobalData
The plant previously produced passenger vehicles such as the Volkswagen Santana and assembled internal combustion engines (ICE) until 2019, but its role within Volkswagen had been reduced in recent years. It now employs fewer than 200 staff to carry out pre-delivery checks for vehicle dealers in the region. Following the deal, Volkswagen will no longer have a presence in the Xinjiang region.
Volkswagen and its local partner, state-owned SAIC Motor, have agreed to sell the facility for an undisclosed fee to Shanghai Motor Vehicle Inspection Certification (SMVIC), a subsidiary of state-owned Shanghai Lingang Development Group. Under the deal SMVIC will also take over SAIC-VW’s test tracks in Turpan, Xinjiang, and in Anting, Shanghai.
A Volkswagen spokesperson told reporters “there is no business case for the plant.” The deal frees the German automaker from years of controversy and pressure from its shareholders and global human rights groups. The company has denied reports that it was previously been under pressure from the Chinese government to keep operating the plant.
The decision to sell its shares in the Xinjiang facility came as Volkswagen looks to push through a major cost-cutting programme involving staff redundancies and possible plant closures in Germany and elsewhere, amid weak sales in China and Europe.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataEarlier this year German chemicals company BASF confirmed it would accelerate its exit from two joint ventures in the Xinjiang region.
