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Volkswagen (VOW3.DE) is prepared to let Chinese electric carmakers take over production lines in its struggling factories as Germany’s automotive industry is struck by a downturn.
Executives at the car-making titan signalled they would be open to tie-ups with Chinese rivals to use up some of the excess capacity in their factories as they scale back production.
Gernot Döllner, chief executive of Volkswagen’s Audi brand, told the Financial Times that deals with electric car companies would “lower the entrance barrier of these competitors”, saying: “For sure, that is thinkable.”
David Powels, chief financial officer at Volkswagen’s eponymous VW brand, told the newspaper: “We’re open for any discussion on any topic with any partner. In a dynamic world, you have to keep all options open.”
It comes after Volkswagen last month abandoned plans to close its German factories, bowing to pressure from unions to keep its sites open despite sliding sales.
The business had argued that its factories were built to supply a European car market where it was selling 16m vehicles every year, but that there was now only demand for around 14m cars. This meant it essentially did not need two of its factories.
However, it dropped plans to close the sites after agreeing a deal with unions to axe bonus payments and reduce more than 35,000 jobs by 2030. It is scaling back production in the factories rather than closing plants.
At the time, Volkswagen said the deal would help it to make more than €15bn (£12.4bn) in wage savings.
The signs that German carmakers are weighing up deals to use up excess space in their factories comes as they battle fierce competition from Chinese EV makers, which have been flooding Europe with cheaper vehicles.
The EU brought in tariffs on imports of Chinese electric vehicles last year amid claims that Beijing was handing companies unfair subsidies which let the country’s manufacturers undercut Europe’s industry.
However, German carmakers have been struggling to catch up with the transition to electric car manufacturing after years where China has been leading the way on innovation.
The downturn in Germany’s automotive industry has sparked concerns over its wider economy, given it has historically been reliant on the sector.
Earlier this month, figures revealed that the economy shrank for the second year in a row in 2024. According to the German statistics office, the economy contracted by 0.2pc in 2024, following a 0.3pc dip the previous year.
Timo Wollmershäuser, of the Ifo Institute in Munich, said: “Germany is going through by far the longest phase of stagnation in post-war history. It is also falling behind considerably in an international comparison.”