German leader not opposed to Chinese taking over car plants

BERLIN, Chancellor Friedrich Merz expressed openness to Chinese carmakers acquiring struggling German automobile plants, though he warned against relying on such moves as a long-term fix for the industry’s challenges. Speaking at a press conference in Berlin on Wednesday, July 15, Merz stated that the decision to allow foreign ownership should rest with individual companies, emphasizing that such actions would serve as an “emergency solution” rather than a sustainable strategy for addressing deeper structural issues within Germany’s auto sector. Germany’s automotive industry faces mounting pressure from declining domestic demand, U.S. import tariffs, and intense competition from Chinese electric vehicle producers. The sector has seen a sharp reduction in employment, with Volkswagen Group CEO Oliver Blume recently informing employees that an additional 50,000 job cuts could be announced beyond the current number already planned. Many German car plants operate well below full capacity, prompting discussions about whether Chinese automakers could either utilize existing production facilities or acquire them outright. Chinese electric vehicle manufacturers, including BYD, are actively seeking production locations in Europe as part of their expansion plans. While Merz did not explicitly endorse any specific takeover, his remarks suggest a willingness to consider such options as a stopgap measure. However, he stressed that these arrangements must not become a permanent substitute for broader reforms within the German automotive industry. Volkswagen itself has previously indicated openness to allowing its Chinese partners to use its manufacturing facilities. In April, Blume acknowledged that his company was receptive to such possibilities, although recent statements have aimed to temper expectations of immediate deals. Other European automakers are also engaging in partnerships with Chinese firms. For instance, Stellantis, which owns Jeep and Fiat, announced in May that it had established a joint venture with China’s Dongfeng Motor Corporation to collaborate on manufacturing, sales, and engineering activities across Europe. In addition to economic concerns, Merz criticized China for maintaining an undervalued currency, the yuan, which he argued gives Chinese exporters an unfair advantage. He noted that from a European standpoint, the long-term consequences of this practice include increased competition and higher import costs. “We can do whatever we like here,” Merz said, “but if this is not corrected, we will always feel the disadvantages, not least through very high imports and subsidised products.” Germany’s trade imbalance with China has worsened in recent years, driven by a decline in exports and a steady rise in imports. This trend has affected multiple industries, including machinery, chemicals, and automobiles. The situation underscores the complex interplay between economic policy, international trade dynamics, and industrial restructuring efforts within Germany’s key sectors. As the automotive industry continues to grapple with these pressures, the government and corporate leaders remain focused on finding viable solutions to sustain competitiveness in a rapidly evolving global market.