The AfD is holding a national congress at the Volkswagen Halle arena in the city of Brunswick on Nov. 30-Dec.1.

A spokesman for VW's works council said the lettering at the stadium spelling out Volkswagen must be covered as the carmaker wants to distance itself from a party that promotes an "ethnic, nationalist" agenda that goes against the company's values.

"This party stands unequivocally against the values of our company such as respect, diversity, tolerance and the spirit of partnership," said the works council's spokesman, Heiko Lossie, adding that the VW board had approved the decision.

The AfD, which criticised the decision, was thrust into the Bundestag national parliament two years ago by voters angry at Chancellor Angela Merkel's decision to welcome almost 1 million refugees, mainly from Syria, Iraq and Afghanistan.

Germany's established political parties refuse to form alliances with the AfD at both the state and national levels, accusing it of harbouring racist and anti-Semitic views, charges it denies.

(Reporting by Joseph Nasr, Editing by Madeline Chambers and Timothy Heritage)