German Automakers Explore Chinese Partnerships and Defence Conversions for Idle Plants

Germany’s leading carmakers face a surplus of production capacity as consumer demand stalls and Chinese brands capture an expanding market share. Volkswagen, Europe’s biggest automaker, plans to cut global output by roughly one million vehicles, half of which will be removed from Europe, leaving sites such as the Osnabrück plant idle and the Zwickau factory in Saxony uncertain. Stellantis has opened its Spanish and French plants to Chinese makers to sidestep EU EV tariffs, highlighting a broader industry search for new tenants.

German carmakers assess China, defense tie-ups to revive idle sites

Key actors include economy minister Dirk Panter of Saxony, consultant Frank Schwope, automotive expert Stefan Bratzel, and the manufacturers Volkswagen Group, Stellantis, Chinese firms BYD, MG and Chery, French-German weapons maker KNDS, and Mercedes-Benz. Dataforce estimates Chinese brands account for about 9 % of European vehicle sales, while Volkswagen’s capacity reduction targets roughly one million fewer cars worldwide.

German carmakers assess China, defense tie-ups to revive idle sites

Volkswagen’s spokesperson told AFP there are currently no plans or discussions to produce Chinese vehicles in its German plants. Stellantis has opened its Spanish and French plants to Chinese makers to sidestep EU EV tariffs, highlighting a broader industry search for new tenants. Mercedes-Benz said its goal is to develop a future-ready solution for the Ludwigsfelde plant, and a KNDS representative said the company is seeking suitable partners for a defence-sector ramp-up.

German carmakers assess China, defense tie-ups to revive idle sites

Analysts warn that easing Chinese access could erode domestic market share and raise security concerns. Frank Schwope notes the high cost of German production, saying any Chinese offer must be very attractive. Stefan Bratzel points to Volkswagen’s wartime legacy—manufacturing for the Nazis and using forced labour—as a historical obstacle to defence collaborations.

German carmakers assess China, defense tie-ups to revive idle sites

Handelsblatt reported that Volkswagen held talks with Chinese carmakers in 2024, yet the company’s spokesperson denies any ongoing negotiations. Sources differ on whether Chinese firms are hesitant because of German costs or whether German firms are reluctant to grant market access. Details of any defence-plant transfer remain undisclosed.

German carmakers assess China, defense tie-ups to revive idle sites

• “To secure the future of the automotive industry in Saxony and in Germany, it is essential not to ignore this reality,” — Dirk Panter, Economy Minister, Saxony

France 24

• “there are currently no plans or discussions regarding the production of Chinese vehicles in the German plants of the Volkswagen Group.” — Volkswagen spokesperson, AFP

German carmakers assess China, defense tie-ups to revive idle sites

• “our goal is to develop a future-ready solution for Ludwigsfelde.” — Mercedes-Benz spokesperson, AFP

German carmakers assess China, defense tie-ups to revive idle sites

• “In historical terms, it's not an easy issue for Volkswagen to share locations with defense companies,” — Stefan Bratzel, Automotive Management expert, AFP

German carmakers assess China, defense tie-ups to revive idle sites

Talks with Chinese manufacturers and defence contractors are ongoing, with possibilities ranging from joint-venture EV production lines to conversion of idle factories into facilities for armoured vehicles and Iron Dome components.

German carmakers assess China, defense tie-ups to revive idle sites