World Economy

VW, Suppliers to Settle Dispute

VW, Suppliers to Settle DisputeVW, Suppliers to Settle Dispute

Embattled automaker Volkswagen will hold talks Monday with two component suppliers, in a bid to end a stand-off over car parts deliveries that has severely disrupted production at the German giant.

ES Automobilguss, which supplies cast gearbox components, and Cartrim, which makes seat covers, suspended their deliveries in August over a legal dispute with Volkswagen, AFP reported.

VW secured temporary injunctions on August 12 ordering the two suppliers to resume deliveries. But the part suppliers have appealed the decision, forcing VW to slash work hours at key factories, and even suspend manufacture of the popular Golf model at its main plant in Wolfsburg, northern Germany.

In a bid to resolve the stand-off, the disputing parties held talks into the early hours of Saturday, a VW spokesman told AFP, adding that they decided “jointly to postpone talks to Monday”.

The group “wishes to achieve a result through negotiations”, although it may also be obliged to pursue legal means, added the spokesman.

The parts suppliers accuse VW of having cut several contracts with no advance warning or compensation, leaving them no choice but to suspend deliveries to protect their own workers.

According to media reports, VW has been seeking concessions from all of its suppliers, amounting to several billion euros.

Volkswagen, which also owns brands from luxury Audi to lower-end Skoda, is still in the throes of its biggest-ever crisis after it admitted in September 2015 to the massive emissions cheating scandal affected 11 million diesel engines.

The revelation slashed the carmaker’s share price by 40%—a drop in market value of €25 billion ($28.3 billion)—in two days.

VW has had to set aside billions of dollars to settle damage claims from car owners and to retrofit the affected cars.