Volkswagen is preparing to close a plant in China for the first time due to increasing competition.
For the first time in its history on the Chinese market, Volkswagen is preparing to completely shut down one of its manufacturing plants. The plant in Nanjing, jointly operated with SAIC Motor, has already suspended car production, and the official shutdown is scheduled for the end of 2025. Business publication Handelsblatt reports, noting that the German conglomerate has not faced a similar precedent in China before — enterprises were previously either upgraded or transferred to other owners.
The closure is primarily associated with logistical difficulties and architectural constraints: modernizing the plant for electric vehicle production proved to be economically unfeasible. Opened in 2008, the facility had a design capacity of up to 360 thousand cars per year. Volkswagen Passat and Skoda Superb sedans, primarily aimed at the domestic market, were assembled here.
Production capacity will be relocated to the more technologically prepared city of Yizhen, which will accelerate the transition to electric vehicle production — a priority focus for VW amid the transformation of the global automotive industry. This decision can be seen as a reflection of a broader strategic adjustment: the conglomerate is moving away from attempts to adapt outdated sites and is instead betting on new factories, initially designed to meet the needs of the "green" lineup.
Interestingly, in 2024, Volkswagen already vacated another site in China — the plant in Xinjiang, but there it was a question of selling the asset, not a complete liquidation. The context today is different: the Chinese car market is rapidly changing, and local electric car manufacturers, such as BYD, Nio, and XPeng, are showing significant growth, displacing international brands in budget and mid-range segments.
In such conditions, abandoning low-margin productions and reorienting to more flexible sites seems not only justified but also a necessary step. In China, which has already become the largest electric car market in the world, maintaining positions requires a high speed of adaptation, and Volkswagen, apparently, is ready for these challenges.