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Why VW wants to scrap brand new electric cars

A car dealer is offering 22 Volkswagen electric SUVs imported from China. The manufacturer has the vehicles confiscated and demands that they be scrapped. What is the dispute about?

“This is a disaster. It's like finding the place where my stolen property is.” Gregory Brudny stands stunned just a few meters in front of a warehouse in Lindow (Mark), Brandenburg. There are 22 Volkswagen electric cars in the hall. They actually belong to the car dealer Brudny, a businessman with a Russian and Israeli passport who has been working in Germany for 30 years.

But they were all confiscated last year. And according to Volkswagen's wishes, the 22 new cars are to be scrapped. “This is my property. How can you destroy property?” says Brudny. “I didn't smuggle anything, everything was absolutely legal.”

Model exclusively for the Chinese market

The seized cars are VW ID.6 models that were imported from China. Volkswagen produces and sells this XXL SUV with up to seven seats exclusively for the Chinese market. In 2021, the model “as a living room on wheels” was presented in China. Volkswagen rejected initial considerations of marketing this large SUV in Europe at the end of 2022.

For automotive expert Helena Wisbert from the CAR Center Automotive Research, this is a completely understandable decision. The ID.6 does not fit into VW's current product range. “Volkswagen is lacking smaller, more compact electric cars instead of even larger SUVs,” said Wisbert.

VW's sales targets in China have not yet been achieved

China is the world's largest car market, including for electric cars, with 6.3 million new registrations every year. Volkswagen sees market opportunities here for both the smaller ID.4 and the large ID.6. But sales of Volkswagen's electric models have so far fallen short of expectations. It has increased continuously since 2021 from around 70,000 electric cars sold to around 190,000 last year. However, the hoped-for sales figures were never achieved. After all, Volkswagen was just shy of the 200,000 target in 2023. But only because prices were massively reduced in the last quarter.

In China, VW realized too late that customers there expect a completely different level of connectivity, digitalization and digital services from an electric car than in Europe, says expert Wisbert. “Volkswagen was not quick enough to meet the demands of customers in China. And as a result, it lost market share.”

Export company use price competition

The price war in China for electric cars has instead led to state-licensed Chinese export companies discovering the trade in Volkswagen's fully electric ID models. The ID.6 with seven seats costs the Chinese end customer the equivalent of around 26,000 euros. In Germany, dealers charge significantly more for the smaller ID.3, namely around 39,000 euros. This enormous price difference created “this incentive to buy vehicles supposedly cheaply in China and then sell them at a higher price in Europe,” explains Wisbert.

Uniland Motors, one of these Chinese export companies, is aggressively promoting global sales of the two Volkswagen SUVs ID.4 and ID.6 in particular. The latter costs the equivalent of around 41,000 euros as an export product. Which is still comparatively cheap for such a large SUV, even if customs and taxes are added when importing into Germany.

Delivery to Europe, together with other vehicles, takes place via large car freight ships. For around 40 days it travels across the oceans to Europe to the most important car transshipment ports such as Zeebrugge or Antwerp in Belgium. There the electric cars are loaded onto trucks.

The car dealer Gregory Brudny then brought his imported ID.6 models to Neuruppin in northern Brandenburg. Previously, all ID.6 models had received an individual operating license after a corresponding adjustment for the European market. This also includes, for example, software for menu navigation in German in the cockpit.

Group sees trademark rights violated

But Volkswagen considers the dealer's actions to be illegal. The group believes its trademark rights have been violated. Volkswagen alone is entitled to decide whether and when a model like the ID.6 will be introduced in Europe. The Hamburg Regional Court followed this argument. It prohibited the car dealer in an interim injunction and later also in a judgment “from using the VW symbol in a circle and ID.6 for motor vehicles for commercial transactions in the European Union.”

Trademark law expert Martina Merker from the Berlin University of Applied Sciences can understand the decision. The legal situation here is clear. Only Volkswagen, as the brand owner of the ID.6 brand, can decide whether and when the product enters which markets. Only then will third parties be allowed to trade with this brand.

“That’s why VW is taking such vehement action against it in a way that I think is right,” said the trademark law expert. “So that third parties are not motivated to imitate the brand-independent car dealer.”

Lawyers, Bailiff and police appear

The car dealership in Neuruppin and Gregory Brudny felt Volkswagen's vehemence. Volkswagen's lawyers appeared at the car dealership with bailiffs and police, and the cars were confiscated – to have them destroyed. The managing director of the car dealership, Cornelia Krell, felt taken by surprise: “The bailiff said to me: Ms. Krell, if you don't do this, you can go to prison. That's how clearly I was told. I felt totally helpless . I hadn't done anything wrong.”

Does Volkswagen also want to protect electric car production in Germany? VW plants like in Zwickau are currently only operating at 60 percent capacity. In this context, expert Wisbert points to the reluctance to buy electric cars in Europe. If a higher-positioned electric car were then offered, “then the ID.6 would end up cannibalizing the ID.4.”

Offers also in other European countries

But there have long been car dealers in other European countries that offer ID.6s imported from China. In Zurich, an independent dealer wants to sell the XXL SUV for 49,500 Swiss francs, the equivalent of around 52,000 euros. However, in addition to Chinese, the only language available here in the cockpit and on the display is English. Independent car dealers also offer imported models in the Czech Republic (Prague), Poland (Krakow) and Lithuania (Vilnius).

Volkswagen says that the trademark law applies to all European markets – including Poland and the Czech Republic. However, the company has not yet taken legal action against Chinese imports in these countries. It cannot be completely avoided that vehicles are imported from China, says CAR expert Wisbert. “But if there is a threat of a precedent in the home market of Germany, then there is much greater attention here than in another country.”

Car dealer Brudny has appealed against the decision of the Hamburg Regional Court. For him it's also about a lot of money, he complains: “My cars are gone, that means a loss of over two million euros,” he complains. “This is a great loss.” The dispute over the 22 vehicles will enter the next round in May before the Hamburg Higher Regional Court. Until then, they are waiting in a warehouse in Lindow (Mark) for possible destruction.

Private imports are a different case

Anyone who privately imports a vehicle like the ID.6 from China is legally better off – similar to private US imports. Because a private person does not act commercially, as expert Merker explains. “Trademark law is commercial legal protection. And in this respect, trademark rights would fail here against private individuals.”

What you should know: The electric cars produced for China have different charging plugs than those in Europe. But there are adapters for this. The different charging plug is also not an obstacle to an individual operating license, writes the Federal Motor Transport Authority: “In the type approval process, no requirements are defined with regard to the design of the vehicle-side charging plug.” What remains, however, is the problem with service and spare parts.

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