By Ilona Wissenbach and Rachel More
BERLIN (Reuters) -Volkswagen told workers on Wednesday it cannot rule out production stoppages due to supply chain issues, in a sign of how a dispute over Dutch chip maker Nexperia is threatening to disrupt Europe’s auto sector.
Auto industry bodies have sounded the alarm over the possible impact on production, after the Dutch government seized control of the Chinese-owned Nexperia last month, citing intellectual property concerns, while China curbed exports of its finished products that are needed by European car makers.
VW issued an internal letter to staff saying production had not yet been impacted by chip shortages, a company spokesperson told Reuters.
“In view of the dynamic situation, however, we cannot rule out an impact on production in the short term,” the spokesperson added.
VOLKSWAGEN MONITORING SITUATION
German daily Bild earlier on Wednesday reported on VW’s internal memo.
The Bild report, citing sources familiar with the plans, also said that production stoppages were planned from next Wednesday due to the problems, impacting the Golf series first then other models.
The Volkswagen spokesperson declined to comment on the “speculation” about the Wednesday stoppage, adding that the company was monitoring the situation carefully.
Volkswagen will temporarily pause production of its Golf and Tiguan models at its central Wolfsburg plant on Friday to deal with an unrelated inventory matter, the company said.
It has said there is no connection between those measures and chip supply problems.
Bild also cited unspecified sources as saying Volkswagen has started discussions with labour authorities about the option of launching a state-backed reduced working hours scheme potentially affecting tens of thousands of employees.
VW declined to comment on that.
NO SOLUTION YET TO RESOLVE NEXPERIA IMPASSE
The dispute adds to global trade tensions hurting European carmakers and their suppliers, including higher U.S. import tariffs and Chinese export curbs on rare earths.
Nexperia chips, which are mostly packaged in China, are technologically simple but used in large quantities in car manufacturing.
BMW and Mercedes have said they are also working with suppliers to secure production in light of the Nexperia stand-off.
The Dutch and Chinese economy ministers spoke on Tuesday but failed to find a solution to the impasse over Nexperia.
(Reporting by Ilona Wissenbach, Ludwig Burger, editing by Miranda Murray, Kirsti Knolle and Jane Merriman)
