On November 27, 2024, Volkswagen, the German automotive manufacturing giant, announced the sale of its factory in Urumqi, Xinjiang, due to economic reasons. The factory was jointly operated by Volkswagen and the Chinese state-owned enterprise SAIC Motor Corporation.
A spokesperson stated, “There is no business case for the factory.” The spokesperson also mentioned that the factory had been operating as a distribution center for other models since 2019, when it ceased production of internal combustion engine vehicles.
Volkswagen has not been producing cars in Xinjiang since 2019. During its peak from 2015 to 2019, the factory employed approximately 650 staff members.
The decision to sell the factory was attributed to economic reasons by Volkswagen. Negotiations regarding the future of the factory have been ongoing for several months.
A Volkswagen spokesperson highlighted the “significant pressure” from competitors in the electric vehicle production sector, stating that Volkswagen needs to “accelerate the transformation of its production network” as the demand for internal combustion engine vehicles decreases.
According to CNN, the buyer of the Urumqi factory is the state-owned enterprise Shanghai Motor Vehicle Inspection Certification Technology Research Center Co., Ltd. (Shanghai Vehicle Inspection), although the sale value was not disclosed.
The factory began operations in 2013, with the initial contract between Volkswagen and SAIC set to expire in 2029. Volkswagen stated that SAIC held the majority stake in the factory, which had assembled vehicles and sold them in the western region of China.
However, the project failed due to weaker-than-expected market conditions.
Governments and human rights organizations worldwide have long criticized China for allegedly using forced labor and implementing large-scale detentions among Uighur minorities in Xinjiang. China, on the other hand, denies these allegations.
Volkswagen has faced external criticism for owning a factory in the region. Nevertheless, the company asserts that there is no evidence of forced labor in the factory.