As Germany suffers through its second year of economic decline, China sees an opportunity.
Chinese officials and automakers are eyeing German factories slated for closure and are particularly interested in Volkswagen’s sites, a person with knowledge of Chinese government thinking told Reuters…
Chinese companies have invested across a range of industries in Germany, Europe’s biggest economy, from telecommunications to robotics but have yet to set up traditional car manufacturing there, despite Mercedes-Benz having two large Chinese shareholders…
VW has long been a symbol of Germany’s industrial prowess, now threatened by a global economic slowdown hitting demand and a creaking transition to green technologies. Building cars in Germany for sale in Europe would allow China’s EV makers to avoid paying EU tariffs on electric cars imported from China…
Logic says the Chinese would be looking for plants in lower cost countries, or prefer to build greenfield plants that would be more efficient, than buying decades old plants in a high cost country, that would need to be gutted to the walls and rebuilt.
That being said, I could see Ford rushing for the exit, and offering it’s entire EU production and distribution network to a Chinese company as a package. Saarlouis Assembly is already scheduled to close this year, with the discontinuation of the Focus. Cologne Assembly has been laying off, as sales of the two EV models produced there have gone soft. The plant in Romania has the lower cost structure the Chinese, and everyone else, seeks, and Valencia Assembly is also cheaper than anything in Germany. I could see Ford offering the entire package for $1.
Depends. If you’re looking to start vehicle manufacturing and there’s a VW plant for sale, you might find a quite acceptable price. And you might be looking to start vehicle manufacturing even if you have surplus capacity at home because of tariff threats or other retaliatory measures - that’s why the Japanese “Big 3” opened plants here in the US back in the 90’s.
That “acceptable price” thing came up in a piece I watched last night. One of those VW plants is apparently shown with a book value of 300M Euros. VW would not realize much of that in selling an idle plant. That is why I suggested Ford should try to get out the door first: dump their entire, loss making, EU operations, in one package, for $1.