Volkswagen halts production in Germany

Volkswagen has suspended output of its Golf model at six of its German plants after two of its suppliers refused to deliver parts mid-production.

The halt to production could cost the carmaker hundreds of millions of euros and will mean reduced hours for almost 28,000 workers.

“Because of a break in deliveries from an external supplier, production of several components at VW factories was halted,” the company said.

The row between VW and its suppliers was reportedly triggered by a dispute over a €500m contract with Car Trim to provide leather upholstery.

VW pulled out of the contract earlier this year and refused to consider compensation, which prompted the two companies to stop supplies. Car Trim was asking for a €50m payment over the “late and groundless cancellation of the contract".

The assembly of Golf vehicles will be suspended until at least Saturday.

VW is already struggling to recover from the fallout of the emissions rigging scandal which erupted in September of last year. Volkswagen was found to have intentionally programmed turbocharged direct injection (TDI) diesel engines to activate certain emissions controls only during laboratory emissions testing.