Volkswagen shifts more production to China, North America

BERLIN — Volkswagen Group is shifting more production to North America and China as a result of the war in Ukraine and will prioritize China this year, CEO Herbert Diess said in a press call on Tuesday.

“We will shift more into China because of the situation in Europe,” Diess said. When asked about how the carmaker would respond in the event that China attacked Taiwan, he said that he did not believe the country would take such a step.

“China has a high interest to keep borders open,” Diess said. “We think it is an asset for us to be strong in China… China is a stronghold for us.”

The carmaker has suspended production in Russia following the country’s invasion of Ukraine.

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A lack of wire harnesses normally sourced from Ukraine was the most significant supply chain constraint at the moment, Diess said, affecting most German plants. If it could not relocate production in 3-4 weeks, its outlook would need to be revised, Diess said.

VW also warned that semiconductor shortages, supply bottlenecks, high commodity prices and the Russia-Ukraine conflict could hit growth in 2022, as the challenges facing the auto industry mount.

“The war in the Ukraine has put our existing outlook into question,” CEO Herbert Diess said at the automaker’s annual press conference on Tuesday.

Diess warned that commodity markets are likely to remain volatile until 2026.

He said VW had become more resilient through the coronavirus pandemic and under normal circumstances would have reason for optimism for 2022.

See also

FAW, VW and Toyota suspended output at plants in Changchun

Volkswagen's new growth engine in China:Models plan of VW Anhui

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