Volkswagen sells its car factory in Xinjiang for “economic reasons”

London
CNN
—

Volkswagen has sold its factory in Xinjiang, a region in northwest China hit by allegations of human rights abuses, for “economic reasons.”

“There is no economic benefit to (the plant),” a spokesman said, noting that it manufactured internal combustion engine vehicles until 2019 and since then has effectively acted as a distribution center for models made at other factories.

Citing “great pressure” from rival automakers producing electric vehicles, the spokesman said Volkswagen needed to “accelerate the transformation of its production network” and that “demand for internal combustion engine vehicles is declining.”

Sales of electric cars are rising in many countries and in China they could account for 45% of all car sales this year, according to the International Energy Agency.

The German automaker announced the sale of the plant, which it owns as part of a joint venture with China’s SAIC Motor, in a press release on Wednesday.

The sale comes after the U.S. government and human rights groups have accused China for years of using forced labor in Xinjiang and committing other abuses such as mass detentions against the Uyghur Muslim minority.

China has repeatedly and vehemently denied allegations of human rights abuses in the region. On Thursday, a State Department spokesman responded to a request for comment on the sale: “I would like to point out that some political forces internationally have spread too many rumors about Xinjiang and generated a lot of false information.”

In 2022, the United Nations High Commissioner for Human Rights released a report saying China had committed “serious human rights violations” against Uighur Muslims in Xinjiang, potentially constituting “crimes against humanity.”

In 2018, a US State Department official accused China of detaining at least 800,000 “and possibly more than 2 million” Uyghurs and members of other Muslim minorities in internment camps in the region.

China referred to the facilities as “vocational training centers” and said in 2019 that such centers had been closed.

Volkswagen has been criticized by human rights activists for owning a plant in Xinjiang, but it said There were no signs that forced labor had taken place at the facility. The company said a visit by executives to the plant in February 2023 found “no evidence of human rights violations or broader issues related to working conditions.”

It also said an audit conducted last year found no signs of forced labor at the factory. However, the Financial Times reported in September that the audit did not meet international standards.

When asked to comment on the FT article, a Volkswagen spokesperson told CNN: “Volkswagen always adheres to legal requirements in its communications. “There has never been any deception of investors or the public.”

The German automaker is also grappling with increasing competition in China, the world’s largest passenger car market, as local automakers have increased production and sales of electric vehicles.

There are problems at home too. Germany’s largest manufacturer announced last month that it plans to close “at least” three factories in the country and lay off tens of thousands of employees. The closures would be the first on home soil in the company’s 87-year history.