Merz says Chinese takeovers of German car plants could be emergency option

German Chancellor Friedrich Merz said he was not opposed in principle to Chinese carmakers taking over struggling German car plants, but he said such moves would not solve the industry's deeper problems.

Speaking at a press conference in Berlin, Merz said individual companies should decide whether they want Chinese firms to use or take over production sites. He described the idea as an emergency solution, not a long-term answer to structural problems in Germany's auto industry.

The source says Germany's car sector is under pressure from weak demand in Europe, US tariffs and strong competition from China. Employment in the sector has fallen. Volkswagen CEO Oliver Blume told staff on Monday that up to 50,000 additional job cuts were possible, on top of a similar number already agreed. He has also said four plants might need to close.

Some German car plants are operating below capacity, and Chinese electric carmakers such as BYD are looking for production sites as they expand in Europe. Blume said in April that he was open to Volkswagen's Chinese partners using its plants, although Volkswagen has since sought to reduce speculation about any imminent deals.

Other European carmakers have also worked with Chinese firms. Stellantis, which owns Jeep and Fiat, said in May that it had formed a joint venture with China's Dongfeng to share manufacturing, sales and engineering operations in Europe.

Merz also accused China of keeping the yuan undervalued. He said Europe could not accept long-term competition with a partner whose currency he said was undervalued by 25 to 30 percent. He said Europe would continue to face disadvantages from high imports and subsidised products if the issue was not corrected.

The source says Germany's trade deficit with China has grown in recent years as exports have fallen and imports have risen, affecting sectors including machinery, chemicals and cars.