Volkswagen has settled a damaging dispute with two of its suppliers that hit auto production at more than half of its German factories. Volkswagen, accustomed to strong-arming suppliers, got a rare pushback, complicating efforts to tighten costs to recover from its emissions-cheating scandal.
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The dispute pitted Volkswagen against suppliers ES Automobilguss and Car Trim, and affected supplies of gearbox parts and seat covers.
Volkswagen has settled a major dispute with suppliers that had disrupted vehicle production at more than half its German plants and threatened to derail its recovery following the diesel emissions scandal.
The suppliers were seeking compensation for lost revenue they said ran into tens of millions of euros, after VW cancelled a contract.
The suppliers agreed to start delivering parts again, and VW will gradually resume production at its German plants, reports Automotive News.
VW confirmed there will be fresh deliveries of seat and gearbox parts with production resuming under the company’s ‘just in time’ system. Prevent Group did not immediately respond to a request for comment. ES Automobilguss became involved after it helped CarTrim when the company faced a liquidity shortage.
The conflict started when VW reportedly backed out of a contract with suppliers and refused to pay them for costs related to the deal. Whether VW management should face questions for over-reliance on single suppliers needs to be clarified, he added.
Germany’s economy ministry had urged both sides to drop their dispute, expressing concern about the impact on jobs.
Suppliers of seat components and differential housings for the vehicle had stopped parts being sent to Volkswagen, forcing factory lines – including at their Wolfsburg headquarters – to be stopped.
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“The consequences for the entire supply chain are already considerable today”, Christoph Feldmann, managing director of the association, said in a statement. The automaker had already cancelled Golf production shifts on October 4-7 and December 19-22 due to falling demand.
