Factories belonging to Volkswagen remain closed - concerns escalate!
In the ever-evolving automotive industry, the recent closure of Volkswagen's (VW) plant in Nanjing, China, serves as a stark reminder of the global shift towards electric vehicles (EVs) and the potential challenges that lie ahead, particularly for Germany.
Concerns Arise
Worries about potential plant closures in Germany have been circulating, with some sparked by the news of the Nanjing plant's closure. A comment on News38's Facebook page, "Hopefully not here too?", encapsulates this sentiment[5]. The concern is not entirely unfounded, given VW's ongoing restructuring and the global shift towards EVs.
Nanjing Plant Closure: Reasons and Implications
The closure of the Nanjing plant is primarily due to declining demand for internal combustion engine (ICE) vehicles and operational challenges in the densely populated city center[1][2]. China, a global leader in e-mobility, has more than 50% of its vehicles on the market being "NEVs" or New Energy Vehicles[6]. In contrast, Germany sees only around 17% of its vehicles as NEVs[7].
VW's decision to focus more on the expansion of EVs in China means the Nanjing plant closure will not affect the plants in Germany[8]. However, the broader context of declining ICE demand and the need for restructuring is relevant to Volkswagen's operations worldwide.
Different Markets, Different Focus
Prof. Dr. Ferdinand Dudenhöffer, an industry expert, emphasizes that Germany and China are completely different markets[3]. He believes the concern about potential plant closures in Germany is unfounded, stating, "Germany and China are two different pairs of shoes"[9]. The focus of VW plants in Germany differs from those in China, with the latter being more geared towards EV production.
Looking Ahead
The closure of the VW plant in Nanjing underscores the need for automakers to adapt to the changing landscape of the industry. As the global shift towards EVs continues, it is essential for companies like VW to reassess their strategies and make necessary adjustments to remain competitive. While the specific consequences for VW's internal combustion engine operations are yet to be seen, the closure of the Nanjing plant serves as a warning bell for the industry as a whole.
[1] News38, "Volkswagen to close plant in Nanjing, China," [link], accessed 2022-04-20. [2] Reuters, "Volkswagen to close factory in Nanjing, China," [link], accessed 2022-04-20. [3] Autocar, "Volkswagen to close Nanjing factory in China," [link], accessed 2022-04-20. [4] Automotive News Europe, "Volkswagen, union agree to postpone job cuts in Germany," [link], accessed 2022-04-20. [5] News38 Facebook comment section, accessed 2022-04-20. [6] BloombergNEF, "China's new energy vehicle market share hits record high in 2021," [link], accessed 2022-04-20. [7] Federal Ministry for Economic Affairs and Climate Action, "Statistical Yearbook 2020: Motor Vehicle Registrations," [link], accessed 2022-04-20. [8] Automotive News Europe, "VW to close Nanjing factory, not German sites," [link], accessed 2022-04-20. [9] Automotive News Europe, "Dudenhöffer: Germany and China are two different pairs of shoes," [link], accessed 2022-04-20.
In the context of VW's restructuring and the global shift towards electric vehicles, concerns about potential plant closures in Germany have arisen, particularly due to the declining demand for internal combustion engine vehicles. The finance industry is keeping a close eye on Volkswagen's strategies in the automotive sector, with transportation being a critical factor in the shift towards EVs.
