Volkswagen Says It Is Exiting China’s Xinjiang Region After 12 Years

Volkswagen said on Wednesday that it was disposing of its stakes in its facilities in northwestern China’s Xinjiang region, exiting an area now known for China’s crackdown on predominantly Muslim ethnic groups there.

Volkswagen had a joint venture assembly plant in Urumqi, the capital of Xinjiang, as well as two test tracks in the region, maintaining the largest and most visible presence in Xinjiang of any multinational company. That drew condemnation from human rights groups. The United States and a growing number of European countries bar imports from Xinjiang because of evidence of forced labor there.

The assembly plant did not just become a political liability for VW — it was also a money loser, because it was designed to make gasoline-powered cars. China has swiftly adopted electric vehicles in the last four years, and half the cars sold in China are now either battery-electric or plug-in hybrid cars.

That has left manufacturers like VW, the market leader in China until recently, with considerable unneeded production capacity.

The assembly plant has not built cars since 2019. VW and its state-owned joint venture partner, SAIC Motor, now employ fewer than 200 workers in Xinjiang who do the final preparation of cars for delivery to VW dealerships in western China. The Shanghai municipal government owns SAIC Motor, which also makes the MG brand of cars and has been rapidly expanding exports.

VW said that ownership of the assembly plant and test tracks was being transferred by the joint venture to the Shanghai Motor Vehicle Inspection Center, which is owned by a different arm of the Shanghai government. No price was disclosed for the transaction.