The companies could export the powertrains jointly developed for Volvo and Mercedes cars.

The backlog of unsold models at dealerships of mass-market brands hovered around a 50-day supply, on average, in October, even as industry sales rebounded for a sixth straight month in the wake of the coronavirus outbreak. 

China’s central government, seeking to boost consumption in the post-pandemic period, is pushing provincial governments to subsidize sales of light trucks and small cars in rural areas. 

Volkswagen Group started producing electric motors in China for a new generation of electric vehicles set to launch next year. The automaker’s transmission plant in the north port city of Tianjin began output of an electric motor, codenamed APP310, last week.