Volkswagen Golf And Volkswagen Passat Production Halted Over Supplier Dispute

Aug 24, 2016 07:50 AM EDT | Mariechris Felipe

At the end of last week rumors started that Volkswagen was having setbacks in some of its factories. The information is confirmed and the German automaker has announced that it will stop production at six of its plants due to problems with some suppliers. This will affect thousands of workers and also two of the most successful brand models: the Volkswagen Golf and Volkswagen Passat.

Volkswagen held an emergency meeting with problem suppliers CarTRIM and ES Automobilguss, which are responsible for providing seats and steel parts for gearboxes respectively, but failed to come up with the solution. Without these components in factories, Volkswagen can not cope with the production of its vehicles. This lack of supply has forced to interrupt the activity in some factories temporarily.

The issue is that suppliers require Volkswagen a compensation of 500 million euros. This is because the German brand has broken a supply contract coming into force next year. As still being fulfilled an earlier contract, the court of Braunschweig has sided with Volkswagen and providers will have to resume operations immediately.

But CarTRIM and ES Automobilguss still have not resumed operations. Therefore some plants will have to stop as mentioned above. In total, this situation will affect about 27,700 workers of the brand. 
The sales of the Volkswagen Golf and Volkswagen Passat will also be affected, as well as a multitude of components for the production of other vehicles.

These are the six factories to stop their activity in the coming days:

Emden: Volkswagen Passat production. Close from 18 to 24 August. 7,500 affected employees.

Wolfsburg: Volkswagen Golf production. Close from 22 to 27 August. 10,000 affected employees.

Zwickau: Volkswagen Golf and Passat production. Close from 22 to 26 August. 6,000 affected employees.

Kassel transmission components and exhaust systems. Close from 25 to 29 August. 1,500 affected employees.

Salzgitter engine components. Close from 24 to 30 August. 1,400 affected employees.

Braunschweig: chassis components and plastic parts. Close from 22 to 29 August. 1,300 affected employees.

"We are really surprised that the fight is escalating to a level where production is severely impacted," Sascha Gommel, a Commerzbank analyst, said in a note to clients. 

"The dispute is coming during an inconvenient time for VW, with its reputation still marred by the emissions-cheating scandal." Gommel added.

Negotiators are at the table again and we need to wait and see what happens with the Volkswagen Golf and Volkswagen Passat. 

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