Chery Eyes Acquiring VW Plant for German Production Push

By connecting Chery’s latest announcement with Volkswagen’s earlier plans, a clearer picture is emerging - China’s Chery is in talks to produce cars in a Volkswagen factory in Germany.

This move could give new life to one of VW’s underused plants while helping Chery expand deeper into Europe. According to a Yahoo Auto’s report Chery is closing in on a deal to build cars for its newly launched volume brand, Lepas, at one of Volkswagen Group’s German factories.

While Chery confirmed that production talks in Germany are ongoing, it hasn’t named Volkswagen specifically.

Charlie Zhang, Vice President of Chery International, said at an April 26 event in China that a final decision depends on various factors, including costs, supply chains, unions, and regulatory issues.

Back in Jan, Reuters reported that some Chinese automakers were interested in two VW plants - Dresden and Osnabruck, which are set to close as part of VW’s cost-cutting strategy. Letting Chery use one of these sites could ease tensions with labor unions and help Chery reduce tariffs by building cars in Europe.

Chery launched Lepas on April 25 as a global brand based on its Tiggo SUVs. It plans to begin European sales in 2026, starting with two compact SUVs and a midsize SUV - available as electric, hybrid and ICE variants.

Chery already assembles cars in Europe through a partnership with Spanish firm Ebro, at a former Nissan plant in Barcelona. That site is being upgraded to produce more plug-in hybrid models and soon, EVs for the Omoda and Jaecoo division.

Full-scale production is expected by the end of 2025, with the plant capable of building up to 200,000 cars per year.

By producing EVs in Europe, Chery hopes to avoid the extra EU tariffs on Chinese-made EVs. The current method of semi-knockdown (SKD) assembly - shipping partly built vehicles from China and completing them in Spain - isn’t enough.

Chery wants to increase local parts content, including sourcing batteries from outside China, to meet EU requirements and demonstrate that it isn’t trying to bypass tariffs. The goal is to reach at least 50% non-China content.

Chery, China’s top auto exporter with over 255,000 units shipped in Q1 2025, is rapidly expanding in Europe. So far, with just the Omoda 5 and Jaecoo 7, the company has sold nearly 16,000 units in Europe this year.