Chancellor Friedrich Merz of Germany on Wednesday, July 15, indicated that he does not oppose Chinese automakers acquiring or taking over struggling German car plants, although he emphasized that this could only be a temporary, not a long-term solution to the industry’s problems.
The automotive industry in Germany is facing weak demand in Europe, U.S. tariffs, and stiff competition from Chinese manufacturers. Employment in the sector is declining, and Volkswagen CEO Oliver Blume informed employees on Monday that the company is considering cutting up to an additional 50,000 jobs on top of an already agreed-upon reduction of the same number.
Chinese Investments as an ‘Emergency Solution’
With many of the country’s car plants operating below full capacity, there is speculation that Chinese automakers could utilize their production lines or fully acquire individual plants. Chinese electric vehicle manufacturers, particularly BYD, are actively seeking production sites to expand their presence in Europe.
Responding to questions about the potential acquisition of German car plants by Chinese companies, Friedrich Merz stated: “Individual companies must decide whether they want this or not.” At a press conference in Berlin, the chancellor added: “I see this as an emergency solution, not a resolution to our own structural problems.”
German automakers have long complained about high production costs and excessive bureaucracy, while critics argue that the companies themselves need restructuring and more efficient management.
Oliver Blume, who also informed workers about the possible closure of four plants, had stated back in April that he was open to Volkswagen‘s production sites being used by the company’s Chinese partners. However, since then, the group has attempted to cool speculation about potential deals.
Other European automakers are also expanding cooperation with Chinese companies. Stellantis, the owner of the Jeep and Fiat brands, announced in May the creation of a joint venture with Chinese Dongfeng for joint production, sales, and engineering activities in Europe.
Trade Deficit and Undervalued Yuan
Friedrich Merz also criticized China, stating that the country artificially keeps the yuan at a low level, making its exports cheaper on global markets. According to him, this creates an unfair competitive advantage for Chinese manufacturers.
“From a European perspective, we cannot agree in the long term to compete with a partner whose currency is undervalued by 25–30%,” said the chancellor. He added: “We can do whatever we want here, but if this is not corrected, we will continue to be at a disadvantage, not least because of very high imports and subsidized products.”
Germany‘s trade deficit with China has increased significantly in recent years as exports have sharply declined while imports have steadily increased. This has particularly affected mechanical engineering, the chemical industry, and the automotive sector.
Source: Channel NewsAsia
