VW diffuses supplier issue through $15 million compensation image

Volkswagen was interested in restarting the production of its top selling models – Golf and Passat – as soon as possible, so the automaker has decided to offer almost $15 million in compensation to supplier.

The issue with some of its suppliers caused havoc on the production lines of several factories of the VW brand, which announced days of manufacturing halts at plants all over Germany. It appears Prevent DEV was asking €58 million ($66 million) in compensation for the money it invested to expand production for a €500 million ($564 million) order that the company then cancelled. The automaker instead got off pretty cheap – only submitting €13 million ($14.7 million) and also claiming it will remain a Prevent partner for the upcoming six years. The issue revolved around Prevent subsidiaries ES Automobilguss, which manufactures gearbox components, and CarTrim, which makes seat covers. Both halted deliveries and that affected six of the ten German factories VW has.

The most impact was dealt on the main site at Wolfsburg which had to be closed, ceasing work on the Golf production – with issues also affecting the lines working for the Passat, Tiguan, and Touran – 28,000 workers were sent home or had reduced hours. ES Automobilguss and CarTrim will now work around the clock to recoup deliveries. This is a rare case of supplier backlash against the automaker’s usually strong-arm tactics – and may be another effect of the backlash pertaining to the Dieselgate scandal.

Via Automotive News Europe