Earlier this week, Volkswagen was under the pressure when production at several Volkswagen plants were interrupted as a result of a halt in component deliveries by external suppliers.
The issue arose following a dispute between VW and two of its suppliers – CarTrim and ES Automobilguss who stopped supplying parts after VW cancelled a number of contracts. The companies, both owned by Prevent DEV, claimed that its cancellation of a contract cost them tens of millions of euros.
Without seat covers made by CarTrim and cast iron gearbox parts made by ES Automobilguss, VW had to reduce the of production at 6 of its 10 German factories, which involves the production of the top-selling Golf and Passat models as well as some segments of transmission, engine production, chassis components, plastic parts and exhaust systems production. VW also had to shorten the working hours for at least 27,700 staff from these 6 plants.
After overnight negotiations were held to resolve the issue, Volkswagen said they have finally settled the dispute with the two parts suppliers after reaching an agreement, reports Reuters.
As a result, the suppliers agreed to restart delivering parts again and the affected plants would gradually resume production as usual.
The new deal will see the suppliers working with VW for at least another 6 years, and VW will also be able to source part of its needs from other suppliers over that time.
According to UBS analysts, the production halt would have cost Volkswagen millions in lost gross profits – the cost of a one-week halt was estimated at €100 million (RM456 million).
Source: Reuters
