Volkswagen has announced the sale of its plant in Xinjiang, China, citing economic reasons. The plant, which was previously producing combustion engine vehicles until 2019, has been operating as a distribution center for models produced in other factories. Due to the increasing demand for electric vehicles and the decline in combustion engine vehicle sales, Volkswagen has decided to accelerate the transformation of its production network.
Electric car sales are on the rise globally, with China expected to see electric vehicles account for 45% of all car sales this year. The sale of the Xinjiang facility, owned as part of a joint venture with China's SAIC Motor, comes amidst ongoing accusations of human rights abuses in the region, particularly against the Uyghur Muslim minority group.
The United Nations High Commissioner for Human Rights has reported serious human rights violations in Xinjiang, potentially amounting to crimes against humanity. China has denied these accusations, referring to the facilities in question as vocational training centers.
Volkswagen has faced criticism for owning a plant in Xinjiang but has maintained that there were no signs of forced labor at the facility. An audit conducted last year showed no evidence of forced labor, although it was reported that the audit did not meet international standards.
Despite the challenges in China, Volkswagen is also dealing with increased competition in the country's automotive market, particularly in the electric vehicle sector. The company has announced plans to shut down at least three factories in Germany and lay off tens of thousands of employees, marking the first closures on home soil in its 87-year history.
