After overnight talks that lasted 20 hours.

Volkswagen has settled a dispute with two parts suppliers that halted production of the Golf and other models, reports Reuters.

Marathon, overnight negotiations were held to resolve the issue, which arose when CarTrim and ES Automobilguss stopped supplying parts after VW cancelled a number of contracts. The companies, both owned by Prevent DEV, claimed to be millions of euros out of pocket as a result.

Without seat covers made by CarTrim and cast iron gearbox parts made by ES Automobilguss, VW shuttered or reduced production at six of its 10 German factories, most notably the main Wolfsburg plant that produces the Golf.

Production will gradually resume as deliveries of parts restart. But, according to UBS analysts, the stoppage will have cost Volkswagen millions in lost gross profits - the cost of a one-week halt was estimated at €100 million ($113 million).

The knock-on effects are reportedly being felt by other suppliers, too, who have been forced to build inventories. And it may lead to orders being cancelled by buyers who don’t want to wait out the delay.

Volkswagen said it would seek price cuts from suppliers as it attempted to free up the money needed to pay for the dieselgate scandal. In this case, that drive has only resulted in losing more money and possibly further damaging its reputation.

Source: Reuters

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