Chinese automakers and government officials are looking to purchase German factories planned for closures, especially Volkswagen plants, in a strategic effort to increase their presence in Europe’s highly prestigious automotive industry, sources who know the matter said.  

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Long the symbol of German industrial prowess, VW confirmed plans to close some of its facilities, including those at Dresden and Osnabruck, as part of attempts to shed its cost. Chinese automotive manufacturers have shown interest to set up a production base in Europe so as to avoid European Union’s tariff on imported electric vehicles (EVs).  

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The Dresden factory, with 340 employees and production of the ID.3 EV, is due to die down in 2025, while the Osnabrück factory with 2,300 employees and production of the T-Roc Cabrio will close by 2027. If an agreement to mutually beneficially sell the Osnabrück site to a Chinese buyer can be reached, a source close to VW said the automaker is open to doing so.  

Not only would it enhance China’s access to the European market, but it would signal a marked change in China’s global automotive strategy where it is too often set in the image of China design, low cost, low quality… Chinese investments have covered telecommunications and robotics, but this would be a sensitive politically minded move into Germany’s historic car industry.  

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The move comes as ties between the two nations have begun to cool. Foreign Minister Annalena Baerbock has called President Xi Jinping a 'dictator' and said China is a 'systemic rival' for Germany's coalition government which has sought to wean Germany off Chinese dependency.  

Volkswagen is in the middle of cutting back production and needs to look for sustainable solutions for their German plants while avoiding impacting workers and unions. A VW spokesperson said the goal must be a 'viable solution which respects the interests of the company, its workers'.  

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For Chinese automakers, navigating the complexities of German labor unions—which hold significant influence over corporate decisions—will be key. Osnabrück union representative Stephan Soldanski suggested openness to collaborations, stating, "We could imagine producing for a Chinese joint venture partner under the VW logo and standards. That is the key condition."  

The potential factory acquisitions reflect China’s growing ambitions in Europe’s automotive sector amidst rising competition and global economic challenges.