Chinese car makers and government officials are eyeing German plants, which are set to close, particularly the Volkswagen sites, a source familiar with the matter told Reuters.

It could be China's most politically sensitive investment in Germany, home to some of the oldest and most prestigious car brands.

  • Volkswagen has long been a symbol of Germany's industrial might, which is now threatened by a global economic downturn that is dampening demand and a shift to cleaner technologies.
  • Chinese companies have invested in a range of sectors in Europe's largest economy, from telecommunications to robotics, but have yet to establish traditional car manufacturing there, although Mercedes-Benz has two major Chinese shareholders.
  • Buying the plants would allow China to consolidate its influence in a strategic sector and avoid EU tariffs on electric cars imported from China.
  • While bids can come from private companies, state-owned enterprises or joint ventures with foreign participants, the Chinese government reserves the right to approve foreign investment and is likely to be involved in any proposal from the start.
  • Chinese company Chery told Reuters that it is considering various options for organizing production in Europe. According to Chery's European boss, buying an existing plant would allow a faster start to production.
  • Another Chinese company, BYD, said it has long-term plans to enter the European market that do not depend on short-term political circumstances.
  • Investment decisions will depend on the new German government's stance on China after elections in February.

After years of close cooperation under Chancellor Angela Merkel, the current German government is seeking to reduce its dependence on China.

AIN reminds our readers that Volkswagen AG is considering an unprecedented decision - the closure of its manufacturing plant in Germany for the first time in its 87-year history.