Volkswagen’s cost-cutting campaign in Germany has reached a point where even the company’s labor union is entertaining the idea of Chinese automakers building vehicles inside underused VW factories.
That sentence would have sounded borderline absurd a decade ago.
Germany’s IG Metall union, one of the most influential labor organizations in Europe and historically a fierce defender of domestic auto manufacturing jobs, said Monday it would not automatically oppose Volkswagen opening excess factory capacity to Chinese partners. The caveat, however, is that any arrangement would need to support Volkswagen’s own long-term industrial plans rather than quietly replace them.
“We do not reject such ideas outright,” a union spokesperson told Reuters. “Each specific case must be carefully evaluated.”
Volkswagen has spent the past two years wrestling with shrinking margins, slowing EV demand in Europe, brutal competition from Chinese manufacturers, and the uncomfortable reality that several of its German plants simply are not operating anywhere near full capacity anymore. The company narrowly avoided factory closures last year after reaching a tense agreement with labor groups that included 35,000 job cuts across Germany while preserving the country’s manufacturing footprint.
But keeping factories open and keeping them busy are two very different things.
Now attention is turning toward facilities like Volkswagen’s Zwickau plant in eastern Germany, which became the company’s first factory fully converted for electric vehicle production. At the height of Europe’s EV optimism, Zwickau was supposed to symbolize Volkswagen’s electric future. Instead, the plant has spent much of the past year operating below capacity as consumer demand for battery-electric vehicles softened across parts of Europe.
Saxony’s economy minister, Dirk Panter, openly suggested this week that Zwickau could become a candidate for cooperation with Chinese automakers looking to expand their European manufacturing presence.
“It is better to further develop industrial expertise at VW in Saxony and secure production than to fight a losing battle and lose value creation,” Panter told German newspaper Bild.
Chinese automakers, including BYD and Geely, are aggressively pushing into Europe, bringing lower-cost EVs and increasingly competitive technology with them. Meanwhile, European manufacturers are struggling with high labor costs, expensive energy, tightening emissions rules, and a regional EV market that no longer looks quite as guaranteed as executives assumed five years ago.