VW says six German plants hit by supplier dispute

Mon Aug 22, 2016 9:15am EDT
 
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FRANKFURT/BERLIN (Reuters) - Volkswagen (VOWG_p.DE: Quote) said it faced production delays at more than half its German plants because of a row with two suppliers that analysts estimate may cost the carmaker tens of millions of euros.

About 28,000 workers at six of Volkswagen's (VW) 10 German factories were affected after the carmarker halted production on Monday of the top-selling Golf and Passat models as well as assembly of engines, gearboxes and emissions systems due to a shortage of parts.

VW's supplier conflict poses a threat to the company's profitability as it seeks to recover following its diesel emissions scandal.

Analysts at UBS estimate that a one-week production halt at its Wolfsburg headquarters would result in about 100 million euros ($113 million) in lost gross profits and could have knock-on effects on other suppliers.

"Production at several Volkswagen plants has been interrupted as a result of a halt in component deliveries by external suppliers," VW said in a statement.

Efforts by Europe's largest carmaker to force CarTrim, which makes seats, and ES Automobilguss, which produces cast iron parts needed to make gearboxes, to resume deliveries have not succeed, VW said.

The local suppliers, part of Wolfsburg-based Prevent DEV, are seeking compensation after saying they faced lost revenues running into tens of millions of euros after VW cancelled a contract. VW is seeking to resolve the dispute in top-level talks with the suppliers on Monday afternoon.

Germany's Economy Ministry called for a swift end to the dispute, noting thousands of workers were affected.

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A VW sign is seen outside a Volkswagen dealership in London, Britain November 5, 2015.  REUTERS/Suzanne Plunkett/File photo - RTSMMUB