VW reviews its procurement strategy in wake of supplier dispute

[HAMBURG] Volkswagen is reviewing its supplier and procurement strategy to avoid another crippling dispute like the one that caused production slowdowns and even stoppages at six plants this month, chief executive Matthias Mueller said.

VW suppliers Car Trim and ES Automobilguss, both part of Bosnia's Prevent Group, triggered the disruptions earlier this month by halting deliveries of seat covers and cast iron parts for gearboxes.

"We will of course look into questions such as multi-sourcing, single-sourcing. And we will look at our procurement contracts and try to optimise matters with all suppliers," Mr Mueller told the Hamburg Business Journalists' Club in remarks embargoed for Tuesday.

"One could discuss at length who is to blame for the fact that this situation went belly up, but I will not discuss it any further," Mr Mueller said, referring to the dispute with Prevent Group.

A simliar escalation of disputes with other suppliers is less likely since VW's partners tend to be members of VDA, Germany's Auto Industry Association, and follow an agreed code of conduct for resolving disagreements.

Prevent Group, was not a member of the VDA, Mr Mueller said.

REUTERS