In a move that could reshape the European automotive landscape, Chinese automaker Chery is nearing a historic agreement with Germany’s Volkswagen Group to produce its vehicles at one of Volkswagen’s factories in Germany. This development, unfolding amid sweeping changes in the industry, reflects Chery’s growing ambitions to penetrate the European market and overcome the regulatory and tariff barriers currently facing Chinese cars on the continent.
Chery and Volkswagen: Strategic Partnership or Economic Deal?
According to European media reports, Chery is engaged in advanced negotiations with Volkswagen to utilize one of its German plants-specifically those at risk of closure as part of Volkswagen’s cost-cutting and profitability improvement plans. Among the facilities under consideration are the Dresden and Osnabrück plants, both of which have attracted interest from Chinese firms seeking to localize production in Europe.
Chery has confirmed it is seriously considering manufacturing in Germany, though it has not officially named its partner. Charlie Zhang, Vice President of Chery International, stated, “We need to study the feasibility plan carefully, because the situation in Germany is very complicated.” The complexity arises from high labor costs, strong labor unions, strict regulatory requirements, and supply chain challenges.
Why Germany? Why Now?
Chinese vehicles in Europe face increasing tariff challenges, as the European Union has recently imposed high duties on electric vehicles imported from China. This has prompted Chinese manufacturers to seek local production solutions to reduce costs and facilitate market entry. Local manufacturing would give Chery a competitive edge-not just in pricing, but also in meeting European quality standards and consumer expectations.
On the other hand, Volkswagen is dealing with excess production capacity due to declining sales and rising competition in the electric vehicle sector. Leasing or selling its factories offers a logical way to preserve jobs and generate additional revenue without requiring massive new investments.
Lepas: Chery’s New Brand for Europe
If the deal is finalized, Chery will produce vehicles in Germany under its newly launched “Lepas” brand, designed specifically for global and European markets. Lepas will be based on modified versions of Chery’s popular Tiggo series, initially launching with three models: two compact SUVs and one mid-size SUV, each available with petrol, hybrid, and fully electric powertrains. These models are expected to hit European showrooms starting in 2026.
Implications for the European Automotive Industry
This move marks a significant shift in the relationship between European and Chinese automakers, bringing competition from the marketplace into the heart of Germany’s storied automotive factories. For Chery, manufacturing in Germany means gaining the trust of European consumers and leveraging the “Made in Germany” reputation, as well as accelerating innovation by tapping into German engineering expertise.
For Volkswagen, the partnership allows it to keep its factories and workforce active while generating income from assets that might otherwise be shuttered. However, it also raises questions about the implications of opening its doors to a strong Chinese competitor, and the potential transfer of sensitive skills or technologies.
Challenges to Implementation
Despite optimism, the deal faces several major challenges:
Compliance with strict German labor laws.
Navigating powerful labor unions.
Meeting stringent European environmental standards.
Overcoming political sensitivities related to Chinese investment in a strategic sector.
A New Era for European Car Manufacturing?
If Chery succeeds in finalizing the agreement with Volkswagen, it will signal the strong entry of Chinese automakers into the core of the European industry, bringing both opportunities and challenges for all involved. The market will be watching closely to see how this partnership evolves, and whether it opens the door to a new wave of East-West collaborations in the automotive world.
Ultimately, the key question remains: Will we soon see Chinese cars with German build quality cruising Europe’s roads, proudly bearing the “Made in Germany” label? Only time will tell.
Tamara is an editor who has been working in the automotive field for over 3 years. She is also an automotive journalist and presenter; she shoots car reviews and tips on her social media platforms. She has a translation degree, and she also works as a freelance translator, copywriter, voiceover artist, and video editor. She’s taken automotive OBD Scanner and car diagnosis courses, and she’s also worked as an automotive sales woman for a year, in addition to completing an internship with Skoda Lebanon for 2 months. She also has been in the marketing field for over 2 years, and she also create social media content for small businesses.
