Volkswagen is planning to stop production at one of its combustion engine car plants in China, a person with direct knowledge of the matter said, in a sign of carmakers' struggles to manage overcapacity in the world's biggest car market.

Volkswagen AG and its oldest Chinese partner plan to shutter one plant in China and possibly more in response to slowing demand for combustion-engine cars, in a further pullback after the venture’s first factory ceased output.

Volkswagen and its Chinese joint venture partner SAIC plan to close at least one plant in China due to slow demand for combustion engine cars, Bloomberg News reported on Wednesday, citing people familiar with the matter.

Volkswagen and its Chinese joint venture partner SAIC Motor Corp plan to shut a factory in Nanjing as early as next year due to declining local sales of some combustion-powered vehicles and the rising popularity of EVs.

Volkswagen is facing another possible plant closure, this time in China, the company’s largest market. Although China is VW’s