VW settles supplier dispute, to restart production at six plants

23 August 2016 15:48 Source:ICIS News

LONDON (ICIS)--Volkswagen (VW) has settled a dispute with two car parts suppliers who had ceased supplying the German car maker, a company official said on Tuesday.

The settlement and resumption of supplies of parts needed for gearboxes and seats enables VW to resume production that was disrupted at six plants in Germany.

The disruptions, which included VW’s base in Wolfsburg, Lower Saxony state, affected almost 28,000 workers. Because of just-in-time logistics, there was a ripple effect throughout the company’s supply chains.

Details of the settlement were not disclosed, and it remains unclear when VW will resume full production at the plants.

A court in Brunswick, Lower Saxony, earlier issued an injunction obliging the suppliers to resume deliveries.

The head of Lower Saxony's government, Stefan Weil, told the media that he welcomed the settlement. The state holds a stake in VW.

Meanwhile, German financial regulator BaFin is probing whether VW may have infringed disclosure requirements, the country’s state media group ARD reported, citing a BaFin spokesperson.

The company officially confirmed the disruptions on its investor relations site on Monday, 22 August. However, the suppliers, CarTrim and ES Automobilguss (ESA), had already ceased supplying VW in early August. The suppliers are both owned by Prevent Group.

The dispute broke out after VW cancelled an order with CarTrim, according to media reports.

Analysts estimate that VW’s Wolfsburg plant was affected for about a week because of the supply disruptions.

Last year, VW’s relations with suppliers came under strained amid alleged attempts by the car major to extract big cost savings from suppliers following its diesel car emissions scandal.

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By Stefan Baumgarten