German auto giant Volkswagen said on Monday it would halt production at six plants for several days as a legal dispute with two key suppliers deepened.

Around 27,700 workers at factories in Emden, Zwickau, Kassel, Salzgitter, Brunswick, and the firm’s home base of Wolfsburg would see their work hours slashed by the end of August, the group said in a statement.

VW had been forced to take the drastic measures at the factories that produce some of its most popular models including Passat sedans and Golf compacts after the two suppliers of gearbox parts and seat covers halted deliveries.

“Although the state court in Brunswick issued temporary injunctions requiring the suppliers to resume deliveries, they so far haven’t fulfilled this obligation,” the statement read.

Instead, the components’ manufacturers are appealing the court decision.

VW said it would resume talks with the suppliers on Monday.

While the group “wishes to achieve a result through negotiations,” it may also pursue legal means, a spokesman said.

The parts suppliers say that VW broke off several contracts with no advance warning or compensation, leaving them with no choice but to suspend deliveries to protect their own businesses and workforce.

Reports in German media suggest that 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 a massive emissions cheating scandal affecting 11 million diesel engines.

The revelation slashed the carmaker’s share price by 40 percent — 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.

 

Source: AFP

 

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