Volkswagen-SAIC venture to close manual transmission plant in China

FILE PHOTO: Volkswagen electric ID car at a construction completion event of the SAIC Volkswagen MEB electric vehicle plant in Shanghai

(This Nov. 18 story has been corrected to say workers will be offered support by the company, not necessarily new jobs in paragraph 5)

BERLIN (Reuters) – A manual transmission plant owned by Volkswagen’s joint venture with SAIC Motors will close next March, the carmaker said on Friday.

The news was communicated to staff this week in a letter published in local media, marking the latest step in the joint venture’s winding down of production of manual cars because Chinese customers favour automatic vehicles.

The decision was taken several years ago, a Volkswagen spokesperson said, adding that production of manual transmission cars by the joint venture had fallen from 500,000 a year to about 50,000.

“For years, customer demand and, with it, our production and employee numbers have consistently fallen … shareholders came together with the management board and decided to suspend production,” the letter to the Shanghai factory’s staff said.

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About 250 staff are affected and will be offered various support measures, a spokesperson said, without providing details and adding that did not necessarily mean a new position.

Volkswagen’s joint venture with FAW in the northeastern city of Changchun will continue to produce manual transmission systems, though output has also fallen in recent years.

The German carmaker is the largest foreign automaker in China but is battling to compete with domestic electric vehicle manufacturers.

It aims to double sales this year from last year’s 70,000, still a long way short of competitors such as BYD, which sold nearly 220,000 EVs in October alone.

(Reporting by Victoria Waldersee, Jan Schwartz and Zhang Yan; Editing by Rachel More and David Goodman)