Volkswagen-SAIC to close manual transmission factory in China By Reuters

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© Reuters. FILE PHOTO: A Volkswagen electric ID car is seen during a construction completion event of the SAIC Volkswagen MEB electric vehicle plant in Shanghai, China November 8, 2019. REUTERS/Aly Song/ File Photo

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

BERLIN (Reuters) – A manual transmission plant belonging to the joint venture between Volkswagen (ETR) and SAIC Motors will close next March, the automaker said on Friday.

The news was communicated to staff this week in a letter published in local media, marking the final step in the joint venture’s halting production of manual cars as Chinese customers prefer automatic vehicles.

The decision was made several years ago, a Volkswagen spokesman said, adding that production of manual transmission cars by the joint venture had dropped from 500,000 a year to around 50,000.

“For years, customer demand and with it our production and the number of employees have been steadily declining (…) the shareholders met with the board of directors and decided to suspend the production,” the letter to staff at the Shanghai factory said.

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

Volkswagen’s joint venture with FAW in the northeast city of Changchun will continue to produce manual transmission systems, although production has also declined in recent years.

The German automaker is the largest foreign automaker in China, but is struggling to compete with domestic electric vehicle makers.

It aims to double its sales this year from 70,000 last year, still a far cry from rivals such as BYD, which sold nearly 220,000 electric vehicles in October alone.

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