 "VW halts German production over fight with supplier")
Volkswagen factories in Germany are grinding to a halt after a supplier took the unprecedented step of cutting off the auto maker as the two battle in court and engage in a public war of words about who's to blame for the impasse.
VW stopped Passat production on Thursday and will halt assembly of its best-selling Golf on Monday if the conflict isn't resolved, said people familiar with the matter. VW has officially said the factories producing those models face slowdowns, as do plants that build chassis, the basic underpinnings of vehicles. The supplier has essentially called the auto maker a bully, prompting VW's top labour boss to respond that he's "furious" and the leader of its home state to say "coercive measures" by a court may be needed to end the conflict.
The production holdup threatens to reduce Volkswagen's earnings by as much as Euro 40 million ($45 million) a week, according to Christian Ludwig, an analyst at Bankhaus Lampe, at a time when the carmaker is trying to boost sagging profit at its namesake brand by lowering annual spending by Euro 1 billion. The conflict centres on a contract that VW signed with the supplier, then later cancelled. The parts maker, which builds seat and transmission parts, says it wants the auto manufacturer to pay for the plant alterations it made to provide the services.
Volkswagen shares fell 1.5 per cent to a two-week low of Euro 119.90 at the close in Frankfurt. The stock has declined 10 per cent this year, valuing Europe's biggest carmaker at Euro 62.4 billion.
Prevent Group's Car Trim seat-component division and ES Automobilguss transmission-parts unit suspended deliveries after Volkswagen rejected discussions to reimburse the supplier when the new contract was dropped, the parts manufacturer said in a statement.
VW stopped Passat production on Thursday and will halt assembly of its best-selling Golf on Monday if the conflict isn't resolved, said people familiar with the matter. VW has officially said the factories producing those models face slowdowns, as do plants that build chassis, the basic underpinnings of vehicles. The supplier has essentially called the auto maker a bully, prompting VW's top labour boss to respond that he's "furious" and the leader of its home state to say "coercive measures" by a court may be needed to end the conflict.
The production holdup threatens to reduce Volkswagen's earnings by as much as Euro 40 million ($45 million) a week, according to Christian Ludwig, an analyst at Bankhaus Lampe, at a time when the carmaker is trying to boost sagging profit at its namesake brand by lowering annual spending by Euro 1 billion. The conflict centres on a contract that VW signed with the supplier, then later cancelled. The parts maker, which builds seat and transmission parts, says it wants the auto manufacturer to pay for the plant alterations it made to provide the services.
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"This is the most extreme case of escalation between a supplier and a carmaker that I've heard of," said Stefan Bratzel, a director at the Centre of Automotive Management in Bergisch-Gladbach, Germany. "There have been court cases in the past, but not a supplier stopping deliveries during series production."
Volkswagen shares fell 1.5 per cent to a two-week low of Euro 119.90 at the close in Frankfurt. The stock has declined 10 per cent this year, valuing Europe's biggest carmaker at Euro 62.4 billion.
Prevent Group's Car Trim seat-component division and ES Automobilguss transmission-parts unit suspended deliveries after Volkswagen rejected discussions to reimburse the supplier when the new contract was dropped, the parts manufacturer said in a statement.