Could cost an estimated $58 million a week
Production of the Volkswagen Golf will be halted in Wolfsburg, Germany amid a dispute between the automaker and two key suppliers, reports Automotive News.
According to Volkswagen, ES Automobilguss has stopped supplies of cast iron parts used in gearboxes, and CarTrim has stopped supplies of seat covers. Both companies are owned by Prevent DEV.
Golf manufacturing will stop at the Wolfsburg factory for five days next week, and hours will be cut for more than one sixth of the 60,000-strong workforce. The plant also builds the Tiguan SUV and Touran minivan.
The supply stoppage also affects the plant in Kassel that builds gearboxes, and the Zwickau plant that builds Passats and some Golfs, while the Emden facility that also builds Passats has been shuttered until August 24.
AN quotes Bankhaus Lampe analyst Christian Ludwig, who suggests the lost production could cost VW as much as €40 million (approx. $58 million CAD) a week.
In a statement issued through Prevent DEV, ES Automobilguss and CarTrim said the dispute has arisen after VW cancelled a number of contracts. “Because Volkswagen declined to offer compensation, CarTrim and ES Automobilguss were forced to stop deliveries,” the statement said.
Reports in the German press say the dispute is over a disagreement over a joint venture, and VW’s demands for price cuts. The automaker is looking to cut €1 billion (approx. $1.46 billion CAD) in annual costs to improve its slim profit margin, and to compensate for the growing costs of the dieselgate saga.
Volkswagen is reportedly considering what legal action to take in the matter, which could include using bailiffs to remove the parts needed from the ES Automobilguss and CarTrim factories.
Source: Automotive News