Volkswagen sells its car plant in Xinjiang, citing ‘economic reasons’

By Anna Cooban, CNN

London (CNN) — Volkswagen has sold its plant in Xinjiang, a region in northwestern China beset by accusations of human rights abuses, citing “economic reasons.”

“There is no business case for (the plant),” said a spokesperson, noting that it produced combustion engine vehicles until 2019 and, since then, has effectively operated as a distribution center for models produced in other factories.

Citing “huge pressure” from rival carmakers that churn out electric vehicles, the spokesperson said Volkswagen needs “to accelerate the transformation of (its) production network” and that “demand for combustion engine vehicles is going down.”

Sales of electric cars are rising in many countries and, in China, they could account for 45% of all car sales this year, according to the International Energy Agency.

The German automaker announced the sale of the facility, which it owns as part of a joint venture with China’s SAIC Motor, in a press release Wednesday.

The sale comes after the US government and human rights groups have, for years, accused China of using forced labor and committing other abuses, such as mass detentions, in Xinjiang against the Uyghur Muslim minority group.

China has repeatedly and vehemently denied accusations of human rights abuses in the region.

In 2022, the United Nations High Commissioner for Human Rights published a report saying China had committed “serious human rights violations” against Uyghur Muslims in Xinjiang, which may amount to “crimes against humanity.”

In 2018, a US State Department official accused China of detaining at least 800,000 “and possibly more than 2 million” Uyghurs and members of other Muslim minorities in internment camps in the region.

China has described the facilities as “vocational training centers” and claimed in 2019 that such centers had been closed.

Volkswagen has faced criticism from rights activists for owning a plant in Xinjiang, but it has said there were no signs that forced labor had taken place in the facility. The company said a visit to the plant by executives in February 2023 gave “no indication of any human rights violations or wider issues around working conditions.”

It also said that an audit conducted last year showed no signs of forced labor at the factory. However, the Financial Times reported in September the audit failed to meet international standards.

When asked to comment on the FT article, a spokesperson for Volkswagen told CNN that “Volkswagen always adheres to the legal requirements in its communications. At no time has there been any deception of investors or the public.”

The German carmaker has also been grappling with rising competition in China, the world’s largest market for passenger cars, as local automakers have ramped up production and sales of electric vehicles.

There are problems at home, too. Germany’s largest manufacturer said last month that it planned to shut “at least” three factories in the country and lay off tens of thousands of staff. The closures would be the first on home soil in the company’s 87-year history.

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