Volkswagen has resolved a dispute with two external suppliers that had halted production at several plants in Germany, hitting the output of Golf and Passat models. 27,700 workers at six plants in Germany were affected by the dispute but the automaker said the suppliers will now resume deliveries.
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The two suppliers at the centre of the row are CarTrim, which makes seats, and ES Automobilguss, which makes cast iron parts used in gearboxes.
A VW spokesman confirmed Tuesday the carmaker had reached an agreement with component suppliers Automobilguss and Cartrim – both belonging to the Prevent business group.
A Volkswagen spokesperson told CNNMoney that deliveries of seat fabrics, gear boxes, and other equipment would resume, allowing the company to ramp up assembly of its best selling Golf vehicle.
Prevent’s German subsidiaries stopped delivering parts to VW when it refused to reimburse the supplier for changes made at its factories before the start of a new contract that was then cancelled. “Volkswagen continues its efforts to reach agreement with the suppliers”, said the company in a statement.
The conflict had threatened VW’s profitability following last year’s diesel emissions test cheating scandal and also risked hurting hundreds of other VW suppliers.
Faced with billions of euros of costs from its emissions scandal, VW had previously indicated it would seek price cuts from its suppliers.
Lower Saxony Economy Minister Olaf Lies, a member of VW’s supervisory board, has said the dispute is hitting VW “at the worst possible time”.
VW said the stoppages were part of regular production adjustments.
Suppliers of seat components and differential housings for the auto had stopped parts being sent to Volkswagen, forcing factory lines – including at their Wolfsburg headquarters – to be stopped. It was unclear whether Salzgitter, which is involved in engine production, would suspend production on Wednesday as planned.
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Analysts at UBS had estimated that a one-week production halt at the carmaker’s Wolfsburg headquarters would cost it €100m (£86m) in profit and have a knock-on effect on other suppliers.
