Berlin, Germany

Volkswagen said Wednesday it will sell its Xinjiang operations in China, following years of pressure from rights groups and investors concerned about human rights abuses against the Uyghurs. The automaker also extended its joint venture with Chinese partner SAIC Motor by a decade to 2040, which reiterates its presence in its largest market, even as flagging sales drive it to negotiate deep cuts in equity.  

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It will be sold to Shanghai Motor Vehicle Inspection Certification (SMVIC), a subsidiary of state-owned Shanghai Lingang Development Group, which opened the Xinjiang facility in 2013. Test tracks in Xinjiang's Turpan and Shanghai's Anting will be run by SMVIC, which will also be responsible for all employees and operations. Terms of the deal were not disclosed.  

The plant could produce 50,000 units per year, but hasn’t made those since 2019. However, its use so far was restricted for final quality checks and vehicle handovers. Volkswagen angrily denied an allegation it maintained the plant to meet Beijing's demands, and said the sale was made on commercial grounds.  

Key stakeholders, including Walmart heirs were enthusiastic about the decision, including Volkswagen’s second largest shareholder, Lower Saxony, and Deka Investment, which had been pressuring for withdrawal. Philipp Bleek of Union Investment praised the move as a 'long overdue step that demonstrates that human rights are non-negotiable.'  

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Like broader markets, Volkswagen's shares slid 0.5% on Wednesday. Stock of the company has tumbled 26 percent this year, after it slashed costs through job cuts and factory closures.  

The SAIC partnership extension is a sign that Volkswagen, the world's biggest car maker by sales, continues to stay in China, the world's biggest auto market as trade tensions mount between Beijing, Brussels and Washington. By 2030, it will launch 18 new models, two of which will be extended range electric vehicles in 2026.  

Volkswagen’s collaboration with Chinese automakers has expanded to include startups like Xpeng, with plans to develop over 30 EV and hybrid models by 2030, tailored to Chinese consumers. Despite China's relaxation of foreign ownership rules, the SAIC extension signals Volkswagen's intent to maintain its joint venture approach to leverage local expertise and navigate market complexities.  

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The move aims to preserve market access while resolving reputational concerns, as global scrutiny over Xinjiang's human rights record continues to mount.