The parts suppliers say that VW broke off several contracts with no advance warning or compensation, leaving them with no choice but to suspend deliveries to protect their own businesses and workforce.
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Shares in VW fell 0.5% on Monday.
Volkswagen said that although Braunschweig District Court has issued injunctions obliging the suppliers to resume deliveries, the suppliers have “not as yet met their obligations”.
The legal battle could limit production at VW for a significant length of time, with the costs of the dispute amounting to over 100 million euros ($113 million) potentially, according to auto industry expert Ferdinand Dudenhöffer.
Volkswagen announced in a statement that production halts have hit its main plant in Wolfsburg most severely where 10,000 workers are affected.
Five hundred companies that supply parts for VW’s Golf model were now being forced to build up inventories because the carmaker was not buying, according to the German Association of Supply Chain Management, Procurement and Logistics.
CarTrim, which makes seats, and ES Automobilguss, which constructs housings for gearboxes, stopped deliveries to the giant German carmaker last week.
Car Trim has so far ignored an injunction that VW has obtained and the regional court in Braunschweig is due to consider a possible injunction against ES Automobilguss on August 31. Volkswagen, accustomed to strong-arming suppliers, got a rare pushback, complicating efforts to tighten costs to recover from its emissions-cheating scandal. “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”, said Ministry’s spokesperson Andreas Audretsch, as reported by BBC. Through his Halog GmbH and Cascade International Investment GmbH holding companies, Hastor has accumulated a 15.2 percent stake in German vehicle-seat manufacturer Grammer AG.
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“I can only encourage all involved not to let it drag on”, Lower Saxony state economy minister Olaf Lies, who sits on Volkswagen’s supervisory board, told Deutschlandfunk radio.
