6 hours ago
10
The Chinese car brand Chery is reportedly close to inking a deal to use a Volkswagen production plant in Germany to build its cars to help dodge import tariffs.
Volkswagen Group’s ongoing sales woes could open the door for Chery, a Chinese car brand, to start building cars in Europe at a German facility.
According to Autonews Europe, Chery is close to sealing a deal with Volkswagen to leverage one of its plants in Germany to produce models outside of China.
While Volkswagen has not been confirmed to be in talks with Chery, two of its facilities in Dresden and Osnabruck, have been earmarked for closure due to dwindling demand and increased competition from cut-priced rivals sourced from China.
Chery International vice-president Charlie Zhang told media last week in China that there are still some hurdles to overcome before the brand can start producing in Germany.
“We need to study the feasibility plan, because in Germany, the situation is very, very complicated,” Zhang said.
Such hurdles include a more comprehensive analysis on cost, supply chain, and labour costs, according to Zhang.
A large part of this is the European market’s quick changeover to electric vehicles, where Volkswagen has struggled to remain in the race against much more affordable competitors from Chinese brands such as BYD, Chery, Geely, Leapmotor, and Deepal.
These Chinese brands are often well under the recommended retail price of Volkswagen electric vehicles (EVs) both in Europe and around the world – including Australia.
For example, a Volkswagen ID.4 mid-size SUV starts at $59,990 before on-road costs locally, whereas a Geely EX5 kicks off from $40,990.
If Chery does manage to secure a European production facility, it could allow the brand to circumvent tariffs as high as 45 per cent for Chinese-made vehicles imported into the European Union (EU).
Tung Nguyen has been in the automotive journalism industry for over a decade, cutting his teeth at various publications before finding himself at Drive in 2024. With experience in news, feature, review, and advice writing, as well as video presentation skills, Tung is a do-it-all content creator. Tung’s love of cars first started as a child watching Transformers on Saturday mornings, as well as countless hours on PlayStation’s Gran Turismo, meaning his dream car is a Nissan GT-R, with a Liberty Walk widebody kit, of course.
