Published On: Wed, Aug 24th, 2016

Disputes With Suppliers Cause A Halt In Production For Volkswagen Models

Volkswagen has announced that production at many of their plants has halted. After disputes with some of their suppliers, the popular auto brand has had to shut down production lines for some of their models.

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The models affected include the Golf and the Passat. This is concerning for them, as these are two of their best-selling models. Due to a lack of seat covers and gearbox housings, they have had to halt production temporarily on these models.

Disputes

The two suppliers involved are CarTrim and ES Automobilguss. While CarTrim supplies car seat covers, ES Automobilguss provides VW with crucial gearbox components. The two German companies are part of a powerful Bosnian conglomerate named Prevent Group.

Apparently, disputes started after VW canceled a contract with the two companies. This caused a huge hit to their salaries, and henceforth the revolt. Although Volkswagen reached out to offer restitution, the offer was turned down by both suppliers.

An official press release states Volkswagen ordered injunctions obligating the suppliers to resume deliveries. The two suppliers have not followed through with the demands thus far.

What Will It Affect?

The dispute is certainly a spanner in the works. Volkswagen has announced that any cars that have already been ordered will go unaffected. Future production will most likely depend on how quickly the parties can resolve their dispute.

Since the Golf and Passat are popular models, many are already in circulation and available at car dealerships. You shouldn’t have a problem finding a New Volkswagen should you be in the market for one. Volkswagen will have to find a way to accommodate future demand.

The dispute has affected various plants. Production has halted at plants in Wolfsburg, Braunschweig, and Zwickau, amongst others. These plants manage the production of various parts of the Golf and Passat.

Although production at many of the plants will restart next week, it will have an impact on the jobs of many VW employees. The company’s press release states that approximately 27,700 workers have been affected. They plan to put affected employees on short-time work until the disputes are settled.

The German Government has also gotten involved. Reuters reported that The German Economy Ministry urged the parties to solve their issues.

The Economy Ministry spokesman, Andreas Audretsch, said this of the matter: “It is about thousands of jobs, which could be affected by shorter work hours, and the responsibility to tackle these problems constructively is very high.”

A Series Of Unfortunate Events

It seems Volkswagen have had a lot of bad luck recently. In addition to the contract disputes, they also recently announced a recall of 460,000 cars. Models with 1.2-litre TDI diesel engines must be recalled to the manufacturer. This is in order to update related software.

It comes amidst a larger scandal known as Dieselgate. Volkswagen equipped their models with software to cheat on diesel emissions. TDI diesel engine cars were fitted with a ‘defeat device’ to put out fewer emissions while being tested.

Despite these problems, Volkswagen remains amongst the best-selling car brands.