Volkswagen to sell operations in China's Xinjiang

SHANGHAI: Volkswagen opens new tab will sell its operations in China’s Xinjiang, it said on Wednesday, after years of mounting pressure to abandon its presence in a region where rights groups have documented abuses against the Uyghur population.

The carmaker made the announcement at the same time as saying it would extend its partnership with Chinese partner SAIC, opens new tab by a decade to 2040, a major move by the German carmaker in its biggest market, where sales have been flagging.

Reuters was the first to report on the deal.

VW and SAIC will sell their plant in Xinjiang to Shanghai Motor Vehicle Inspection Certification (SMVIC), a unit of state-owned Shanghai Lingang Development Group, which will take on all its employees, they said.

Under the terms of the deal, for which financial details were not disclosed, SMVIC will also take over SAIC/VW’s test tracks in Turpan, Xinjiang, and Anting in Shanghai. Volkswagen will then no longer have a presence in Xinjiang. Beijing has denied any abuses there.

Stakeholders including the state of Lower Saxony, Volkswagen’s second-largest shareholder, welcomed the sale.

Top 20 shareholder Deka Investment, one of several investors who had been pressuring the carmaker to pull out of Xinjiang, said the exit would bring controversial discussions to an end with minimal financial impact.

The Xinjiang plant, which opened in 2013 and previously assembled Volkswagen’s Santana vehicle, had dwindled in significance in recent years after the carmaker cut jobs, leaving about 200 employees to conduct final quality checks and hand over vehicles to dealers in the region.

Volkswagen has denied reports that it kept the plant open as a condition from Beijing to keep producing across China. It said on Wednesday the decision to sell the plant was made for economic reasons.