Volkswagen Group CEO Oliver Blume has said imposing tariffs on Chinese cars in Europe would stifle competition and could risk retaliatory action in China.
Speaking at the company's annual press conference, he opined that making it more difficult for Chinese firms to sell cars in Europe would ultimately threaten the ability of European firms to compete at a global level.
"We're in favour of free world trade and fair world trade as well. All economic operators must follow the same rules. So it works both ways," Blume said.
"What is potentially dangerous is that if you engage in protectionist practices on one side, you will cause this type of opposite protectionism on the other side."
China is the Volkswagen Group's largest single market globally. Including both imports and cars produced there by its Chinese joint venture partners, the German giant sold 3.2 million vehicles there last year - a 1.6% year-on-year uptick and sufficient for a huge 14.5% market share.
The Volkswagen ID 3 was China's best-selling compact car in the fourth quarter of the year, while the larger Volkswagen ID 4 was one of the top five compact SUVs in the market.
China also accounts for a significant proportion of Audi's and Porsche's global sales and is home to the production of a huge variety of Group models, both for local sale and export.
In addition, the Volkswagen Group has signed important strategic partnerships with Chinese firms including Xpeng (with Volkswagen) and SAIC (Audi), as well as technology outfits including Horizon Robotics and Thundersoft, and recently established the dedicated Volkswagen China Technology Company as a standalone division to develop "intelligent, fully connected vehicles".
The EU introducing tariffs on Chinese-made cars – as has been proposed by its lawmakers – could prompt China to introduce tariffs on European-made cars, which would have severe implications for the Volkswagen Group's performance there.
"When it comes to trade agreements, international trade agreements, we have to do just the same. Let's be balanced and have a level playing field. It's not only true for the interaction between Europe and China but also other parts of the world," Blume said.
"Duties and taxes should be reasonable and balanced. I want to be very clear about this: we're not in favour of protectionism. We are for an equal balance among different trading regions of the world."
Blume's comments echo those of his counterpart at Mercedes-Benz, Ola Källenius, who earlier this week questioned the EU's decision to investigate whether Chinese car makers are competing fairly in Europe.
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