German automaker Volkswagen has been facing a sales crisis in recent years, which has led to production reductions, layoff plans and even the closure of units in some countries. And the new phase of the recovery strategy could involve the transfer of idle units in Germany itself to Chinese electric car manufacturers.
According to the German newspaper Handelsblattprobably the production of Chinese models in German factories – a taboo in the country – is becoming an increasingly concrete scenario. The newspaper said that VW Group CEO Oliver Blume recently caused a public uproar with these considerations and added that the company’s current management has been holding talks with Chinese automakers about possible cooperation in German factories since 2024.
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Furthermore, Saxony’s Economy Minister Dirk Panter formally proposed Chinese car manufacturers as partners in production at the Volkswagen plant in Zwickau. “It is better to further develop VW’s industrial competence in Saxony and secure production than to fight a losing battle and lose value. We have to keep up with the times. Therefore: China is an opportunity for Zwickau”, said the SPD politician in the newspaper “Bild”.
The idea of a joint venture between Volkswagen and a Chinese manufacturer would be to use one or more currently underutilized production lines and manufacture vehicles in Saxony. The prerequisite, according to the minister, is compliance with clear European rules and standards. “Our parameter is not ideology, but industrial sustainability and secure jobs at VW in Saxony.”
In Zwickau, VW only produces fully electric cars such as the ID.3 and the Audi Q4 e-tron. According to the company, 8,000 people worked at the factory at the end of last year.
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The Volkswagen Group has actually been facing a crisis for years. In the months of January to March 2026, the company’s profit after tax fell 28.4%, to 1.56 billion euros. The data is even more worrying because the result in the 1st quarter of last year already showed a drop of 41% compared to the same period last year.
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Global sales decreased by 2.5%, to 75.7 billion euros, driven by the situation of wars, geopolitical tensions, trade barriers, stricter regulations and fierce competition, according to CEO Oliver Blume.
Sales figures are weak especially in China and the US and growth in Europe has failed to compensate for this.
When presenting the results at the end of April, VW’s CFO and COO, Arno Antlitz, commented that, despite some progress in cost reductions, the operating margin remained very low, at 4.3%.
“We need to fundamentally transform our business model and achieve structural and sustainable improvements. This includes improving the cost structure of our vehicles without compromising product substance, significantly reducing operating costs, increasing the efficiency of our factories and accelerating technology development and decision-making,” he said.
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Following this, a restructuring plan was announced that will result in the cutting of 50,000 jobs in Germany by 2030.
