GM General Motors Company

By Hendrik Varnholt and Sarah Sloat 

Suppliers to Volkswagen AG on Friday denied responsibility for bottlenecks at the German car maker's plants, a problem that has forced Volkswagen to halt production of two models at its main plant and reduce working hours elsewhere.

Volkswagen said it would temporarily halt production from Aug. 22 to 28 of its Golf and Sportsvan models at its Wolfsburg, Germany, factory due to a dispute with suppliers. It has also instituted reduced hours at its Emden plant because of a shortfall in parts for seating components and is considering cutting hours at three other plants because of gearbox parts that haven't been delivered.

ES Automobilguss GmbH and Car Trim GmbH, the suppliers involved in the dispute, however, said they stopped deliveries because Volkswagen canceled contracts without explanation or compensation. They said as a result they are owed tens of millions of euros.

"We're not the cause of Volkswagen's crisis and the resulting short-time work," the companies said in a joint statement. "Those issues are homemade and Volkswagen is trying to blame its own problems on the supplier industry," ES manager Alexander Gerstung said.

Car Trim makes parts for seating and ES Automobilguss makes gearbox components.

"We seek a mutually agreed solution with Volkswagen and are open to suggestions," Mr. Gerstung said. He said the suppliers' decisions were taken to protect their own workforces and financial health.

Volkswagen didn't respond immediately to the suppliers' accusations.

The car maker continues to grapple with financial and strategic issues caused by an emissions-cheating scandal that erupted nearly a year ago. In September, U.S. authorities said the company cheated on pollution tests by outfitting diesel engines to produce less emissions in tests than on the road, a revelation that threw Volkswagen into turmoil. The company set aside nearly $18 billion in its 2015 accounts to cover costs related to the scandal.

Volkswagen said the current production problems weren't related to demand for its vehicles. Demand for some vehicles has fallen in some markets, however. In Germany, the Federal Motor Vehicle Office most recently reported that registrations for new Golf models fell 8.9% in the first seven months of the year.

A spokesman for Volkswagen said he couldn't say how many fewer vehicles would be produced due to the halt in Wolfsburg or how many workers would be affected. He also couldn't say whether workers would stay home or simply work fewer hours during the several-day period.

A person familiar with the situation said reduced hours at five plants could affect as many as 20,000 workers.

Volkswagen employs roughly 276,000 people in Germany. Around 73,000 workers are employed at the Wolfsburg plant, which produced around 815,000 vehicles last year, according to the company.

Separately, General Motors Co.'s Adam Opel GmbH said it would reduce working hours for some employees at factories in Rüsselsheim and Eisenach, Germany, this year due to weakening demand for its Corsa and Insignia models.

The GM spokesman didn't say how long the reduced work hours would last, saying it would depend on U.K. demand for the vehicles. The company cited weaker demand in the aftermath of the U.K. vote to leave the European Union.

--William Wilkes contributed to this article.

Write to Hendrik Varnholt at hendrik.varnholt@wsj.com and Sarah Sloat at sarah.sloat@wsj.com

(END) Dow Jones Newswires

August 19, 2016 13:17 ET (17:17 GMT)

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