VW Golf Production To Be Halted Due To Supplier Dispute

VW Group will stop production of the Golf hatchback at their main factory in Wolfsburg due to a dispute with two of its main suppliers, according to reports.

The company will also cut working hours in three of its other German plants, reports AutoNews.

VW claims that Golf production is affected because of their supplier ES Automobilguss stopped the delivery of cast iron parts used to make gearboxes. Car Trim, a sister company of ES Automobilguss, also stopped deliveries of seat covers earlier this month.

The dispute between VW Group and its suppliers is about a payment disagreement over a joint venture and price cuts demanded by the former as the company seeks to reduce costs amid its dieselgate scandal.

VW is considering to use ‘every legal means at its disposal’ to force the suppliers into meeting their delivery commitments, according to German media, including police-escorted trucks into the suppliers’ plants to collect the said components. A court hearing is scheduled for August 31.

What this means for the VW Golf, Europe’s best-selling car, is that its production will be halted in Wolfsburg for five days next week, cutting working hours from 10,000 out of the 60,000 people employed at the factory.

VW will also cut shifts from VW’s gearbox-making facility in Kassel and at a plant in Zwickau which builds the Golf and Passat. The company’s factory in Emden which also builds Passats with be idled between August 18 to 24, also due to Car Trim deciding to stop deliveries.

The decision by the suppliers to stop deliveries is “incomprehensible and a heavy burden for Volkswagen and its employees,” Lower Saxony’s Economy Minister Olaf Lies told state parliament on Thursday.

The dispute may cost VW as much as 40 million euros ($45 million) per week according to Christian Ludwig, an analyst at Bankhaus Lampe.