Volkswagen Group’s joint venture in China plans to close factories in response to declining demand for fuel vehicles

Recently, SAIC Volkswagen, a joint venture between Volkswagen Group and China’s SAIC Motor Group, is planning to close a factory in Nanjing and may further close other factories to cope with the slowdown in demand for internal combustion engine vehicles.

The Nanjing factory mainly produces Volkswagen Passat and Skoda brand models, with an annual production capacity of 360,000 vehicles.

This move is not the first time Volkswagen has adjusted its production capacity layout in China.

As early as 2022, Volkswagen has stopped automobile production activities at Shanghai Anting No.

1 Plant and transformed it into a research and development base, focusing on electrification, intelligent manufacturing and customer-oriented R & D.

, According to people familiar with the matter, another factory in Ningbo City, Zhejiang Province, which is responsible for producing multiple Skoda models, also stopped production for several months, and Volkswagen is considering closing the factory.

At the same time, Volkswagen Group is conducting a strategic evaluation of its Skoda brand in the Chinese market.

Volkswagen Group (China) responded by saying that all SAIC Volkswagen factories are operating normally based on market demand and company expectations, and as the company’s focus shifts to smart electric vehicles, automobile production and parts factories are also gradually transforming.

, Currently, Volkswagen Group is reassessing its influence in the Chinese market and considering closing some factories, a move that reflects the complex challenges the company faces in its global transition to non-fossil fuel vehicles.

Last year, the total output of Volkswagen Group’s 39 factories in China was still more than a quarter lower than the pre-epidemic peak.

operating profit of Volkswagen’s joint ventures in China also fell to 2.

62 billion euros, down about half from its peak level in 2015.

According to SAIC Motor’s annual financial report, SAIC Volkswagen’s capacity utilization rate last year was only about 58% of the production capacity limit of 2.

1 million units.

, Faced with growing demand for electric vehicles in the Chinese market, Volkswagen Group is accelerating its electrification process.

In 2022, Volkswagen’s electric vehicle deliveries in China increased by 23% year-on-year to 190,820 units.

In Anting, Volkswagen has a brand new electric vehicle factory, which shows that Volkswagen is actively adjusting its strategic layout in China to better adapt to market changes.

As SAIC Volkswagen seeks to strengthen its strength in the field of electric vehicles, reducing the production scale of traditional fuel vehicles will not only help save costs, but will also free up more resources for it to invest in the research and development and production of new energy vehicles.

, As the global automobile industry transforms towards electrification, Volkswagen Group’s series of adjustment measures in the Chinese market are not only a positive response to the current market situation, but also a forward-looking layout for future development trends.

In the future, Volkswagen will continue to deepen cooperation with Chinese partners and jointly promote the development of China’s automobile industry in an intelligent and green direction.

, Volkswagen Group's joint venture in China plans to close factories in response to declining demand for fuel vehicles, return to the first electric network home page>,.

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