Could the future of Audi Brussels be Chinese?

Several media outlets speculate about a possible Chinese takeover of the Audi factory in Forest (southwestern part of Brussels). The factory’s future as an Audi outlet looks dark, and Chinese companies looking for a solution to the import tariff war started by the EU could bring a solution.

Currently, the Brussels factory is idle because of the summer vacation and because the demand for the Audi Q8 e-tron, the only car produced at Audi Brussels, is slowing down. From Audi headquarters, there’s no news whatsoever about the future. Audi management didn’t even show up at a special commission meeting in the Belgian Parliament on the matter.

From what we (don’t) hear or see from Ingolstadt, Audi’s headquarters in Germany, one can easily conclude that Audi is looking for an interesting solution to eliminate the extra factory (in their reasoning). Several sources are now thinking about a possible Chinese interest in the site.

Flexible

Like all industrial sites, Audi Brussels has pros and cons. Looking at the cons, the factory is situated in a relatively small enclave in the southwest of Brussels where a possible expansion is almost impossible. It’s a small site and not so easily reachable by road.

The plant’s location in Belgium also means that labor costs are high, and there have been some scrimmages between management and unions in the past, giving the plant an image of a ‘difficult’ factory.

On the positive side, the factory workers are renowned for their professional skills and productivity. As the Audi pilot factory for EV manufacturing, they have acquired a lot of experience in the matter, and the factory (and its workers) have always shown great flexibility in starting new manufacturing processes.

The EU-China tariff war

At the beginning of the year, the European Commission started an investigation into ‘unfair’ subsidies of the Chinese government for its car manufacturing companies. The inquiry resulted in a (provisional) raise of the import tariffs for Chinese cars.

As of July 4th, the European authorities augmented their import tariffs on Chinese cars by 20 to almost 40% (on top of the existing tariff of 10%) depending on the manufacturers’ willingness to collaborate and their links with the Chinese authorities.

This tariff raise is still provisional; the final decision will be made on November 4th. However, the tariffs are already accounted for on every Chinese vehicle entering the EU.

Chinese interest

Several Chinese car manufacturers have recently shown increased interest in establishing European factories. The car manufacturing industry generally tends to try to (at least) assemble cars where they are sold, but the European decision has indeed accelerated this interest.

Important Chinese players abroad, like Geely and SAIC, and smaller ones like Nio, have been looking around Europe to manufacture cars. BYD, for example, manufactures buses in Hungary and is building a car assembly plant nearby. Recently, Stella Li, the company’s number two, confirmed that the fast-expanding Chinese automaker is looking for a second location in Europe.

The small and very popular fully electric Volvo EX30 is only made in China. To avoid surplus car taxes, Volvo has already decided to manufacture the EX30 in Ghent as soon as possible in 2025.

Some Chinese companies might be interested in a flexible and not too big factory like Audi Brussels (with a maximum capacity of 150,000 to 200,000 cars). Considering the available skills and size, the more expensive models could probably be made there.

First talks?

According to the newspaper L’Echo, Isabelle Grippa, CEO of hub.brussels, the regional agency for attracting businesses to the Brussels region, has recently been in China and has met with different Chinese car manufacturers and other industry bosses.

Grippa has confirmed the meetings in the newspaper but minimizes their importance. “The visit to China was already planned a long time ago and was not directly focused on electric vehicles,” she declared.

“Our contacts on site with the car industry representants showed a grown interest to come to Europe fired by the new import tariffs, but a site like Audi Brussels has never been the subject of discussion,’ she added.

The Chinese will most likely wait to move until the European Commission and the different member states have decided on the tariffs. If so, Audi Brussels could be an interesting target for them.

Prudence prevails

But as always, one has to stay prudent. Some years ago, when Caterpillar was leaving Gosselies (near Charleroi, in the southwest of Belgium), there were plans to start producing Chinese vehicles (Thunder Power) on the premises instead, but the whole scheme collapsed.

Recently, VDL Nedcar (in the south of the Netherlands) had to fire most of its personnel because BMW stopped the contract for assembling Mini there, and a search for alternatives has never led to a solution.

Some people have doubts about the future of the European car industry. Some warn that bringing the Chinese into Europe could endanger it even more. But now, Chinese investment seems to be the only lifeline for ailing plants like Audi Brussels. Wait and see.