VW to Suspend Production at Engine Plant in China Amid Overcapacity
Declining Sales, Shift to Electric Vehicles Contribute to Decision
Volkswagen (VW) has announced plans to suspend production at one of its engine plants in China due to overcapacity. The move comes as the automaker grapples with declining sales and a shift toward electric vehicles (EVs) in the world's largest auto market.
The plant in question is located in the eastern Chinese city of Dalian and produces engines for VW's gasoline-powered vehicles. Production is expected to be halted in the second half of 2023, affecting approximately 1,500 workers.
VW's decision to suspend production at the Dalian plant is part of a broader strategy to reduce its manufacturing footprint in China. The automaker has been struggling with declining sales in the country, which has been exacerbated by the COVID-19 pandemic and the rising popularity of EVs.
In addition to overcapacity, VW is also facing increasing pressure from Chinese automakers, which have been gaining market share in recent years. The company is looking to shift its focus toward more profitable segments, such as EVs and premium vehicles.
VW's decision to suspend production at the Dalian plant is a significant development, as it signals the company's willingness to make major changes to its operations in China. The move is likely to have a ripple effect on the automotive industry in the country, as other automakers may follow suit in reducing their manufacturing capacity.
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