Supplier Dispute

VW's Achilles Heel

An employee polishes the VW charging port badge on a Volkswagen GTE Golf hybrid automobile inside the Volkswagen AG (VW) factory in Wolfsburg, Germany, on Friday, May 20, 2016. Volkswagen AG agreed to raise German workers' pay after labor leaders vowed that employees wont foot the multi-billion-euro bill to resolve its diesel-emissions scandal. Photographer: Krisztian Bocsi/Bloomberg
An employee polishes a VW car.
  • Why it matters

    Why it matters

    Automotive parts supply group Prevent managed to severely disrupt Volkswagen production, in what many view as the start of a struggle between carmakers and automotive suppliers over costs.

  • Facts


    • Volkswagen is trying to lower its supplier costs as a result of the costly Dieselgate scandal.
    • Supplier Prevent Group provides seat covers and transmissions for several VW models, but halted deliveries in early August in protest over the carmaker’s cost-cutting.
    • Volkswagen was forced to interrupt production of its popular Passat and Golf models.
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Volkswagen and two car parts suppliers owned by the Prevent Group have agreed to settle a delivery dispute that has affected 28,000 VW employees in six German factories and cost millions of euros per day, VW said Tuesday.

“The suppliers will restart the deliveries to Volkswagen on short notice,” Volkswagen said in an email. “Consequently, the affected factories will prepare for the gradual relaunch of manufacturing operations.”

At the beginning of August, Prevent Group’s subsidiaries CarTrim and ES Automobilgus stopped supplying VW, Europe’s largest carmaker, with seat covers and metal transmission casings after VW had canceled a contract.

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