Volkswagen’s cost-cutting efforts in Germany have advanced to a stage where its labor union is considering allowing Chinese automakers to use its underutilized factories. Such a move would have been unimaginable ten years 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.
A union spokesperson told Reuters that each specific case must be carefully evaluated.
Underused factories remain open
Volkswagen has faced two years of shrinking margins, slowing EV demand in Europe, brutal competition from Chinese manufacturers, and the reality that several of its German plants are not operating anywhere near full capacity. The company narrowly avoided factory closures last year after reaching an 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. The Zwickau plant in eastern Germany, fully converted for electric vehicle production, has spent much of the past year operating below capacity as consumer demand for battery-electric vehicles softened across parts of Europe.
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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. He told German newspaper Bild that it was better to further develop industrial expertise at VW in Saxony and secure production than to lose value creation.
A changing relationship
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.
The irony is hard to ignore. Volkswagen spent years building joint ventures inside China to gain access to that market. Now the possibility exists that Chinese automakers could end up utilizing Volkswagen’s excess production capacity in Germany itself.
Volkswagen CEO Oliver Blume has not publicly endorsed any specific Chinese manufacturing partnership for German plants, but he has made it clear the company needs to become leaner and more financially efficient after operating profits were hammered by tariffs, slowing EV adoption, and intensifying competition. Porsche’s recent struggles in China have not helped matters either.
The union’s willingness to consider the idea reflects how much conditions have changed. What was once unthinkable is now a topic of serious discussion.
