Volkswagen Germany Says Goodbye to 'Stick'... Liquidates Transmission Factory in China

Volkswagen, SAIC, FAW Joint Shanghai Plant Halts Manual Transmission Production
Historic Shift in Internal Combustion Engine Auto Industry Amid Rapid Growth of China's Electric Vehicle Market

[Asia Economy Senior Reporter Cho Young-shin] Germany's Volkswagen Group is liquidating its manual transmission factory in China. As demand for new energy vehicles such as electric cars surges, manual transmissions are expected to disappear into history.

[Image source=Reuters Yonhap News]

According to Chinese media Jiemian News on the 18th, Volkswagen Transmission Shanghai notified all employees the day before that it will stop transmission production in March next year, and the factory will be liquidated thereafter.

In the notice, the company stated that the automotive industry is undergoing a shift from traditional internal combustion engines to electric vehicles. It said all employees will experience this historic change, explaining the inevitability of production suspension and factory liquidation.

Manual transmissions, commonly called "stick," are key components of internal combustion engine vehicles. In Korea, they are hard to find as automatic transmissions dominate. The stick is also an option chosen by some enthusiasts because it provides the so-called "driving pleasure." Although automatic transmissions can be manually shifted, their response speed is slower and cannot match the feel provided by manual transmissions. In Europe and other regions, there are still many drivers using stick-shift cars.

The suspension of manual transmission production at Volkswagen Transmission Shanghai is due to the explosive increase in electric vehicle demand. Jiemian News analyzed that Volkswagen's liquidation of the manual transmission factory is not surprising as the company has been striving to shift its industrial structure to new energy sources. It also explained that Volkswagen Group sold a total of 366,400 electric vehicles by the third quarter of this year, of which 211,900 were sold in Europe.

The factory Volkswagen Group decided to liquidate was established in 2001 as a joint investment by Volkswagen China Investment, Shanghai Automotive Industry Corporation (SAIC), and China First Automobile Works (FAW). The capital was $47 million, with Volkswagen holding 60% of the shares and SAIC and FAW each holding 20%. According to local Chinese media, this factory produced manual transmissions (MQ200) installed in small and compact models such as Volkswagen Jetta, Santana, Lavida, and Polo.

Besides the Shanghai manual transmission factory closing in March next year, Volkswagen Group also has a manual transmission factory (a FAW joint venture) in Changchun, Jilin Province, with an annual production capacity of 450,000 units. Since Volkswagen Group affiliate Audi is investing 2.6 billion euros (3.62 trillion KRW) to build an electric vehicle production plant in Changchun (with shares of Audi 55%, FAW 40%, Volkswagen 5%), the Changchun transmission factory is also expected to close soon.

Volkswagen Group previously announced plans to convert half of its vehicle sales to electric vehicles by 2030. The group also revealed a future global business plan to stop producing internal combustion engine vehicles starting in 2033.

As global automakers compete to expand electric vehicle production, the difficulties faced by first-, second-, and third-tier suppliers producing parts for internal combustion engines and transmissions are expected to intensify further.

This content was produced with the assistance of AI translation services.