Volkswagen, suppliers to hold talks on production-crippling dispute

BERLIN, Germany – Embattled automaker Volkswagen will hold talks Monday, August 22, with two component suppliers, in a bid to end a standoff 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.

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 standoff, the disputing parties held talks into the early hours of Saturday, August 20, 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 affecting 11 million diesel engines.

The revelation slashed the carmaker’s share price by 40% – a drop in market value of 25 billion euros – 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.

It secured preliminary approval for a $14.7-billion settlement from a California judge in July.

But several German states are examining legal action to claw back losses to pension schemes and other holders of VW shares.

The company may also be forced to pay out for environmental damages in cases brought by several US states. – Rappler.com