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VW Brazil and Prevent Group Dispute Halts Production

September 14, 2016

Production at three Volkswagen Brazil manufacturing plants and the São Carlos engine plant has been halted due to long-lasting commercial litigation with supplier Prevent Group, reports

The stoppage concerns Prevent-owned seat manufacturer Keiper, which claims financial losses on supply contracts in Brazil. Volkswagen of Brazil said Prevent failed to honor 11 commercial accords since March of 2015 when supply disruptions began.

Production at the automaker’s factories has been continuously or intermittently halted for more than 150 days, leading to a total production loss of about 150,000 vehicles. Volkswagen has laid off workers from the plant's assembly line.

After negotiations, VW has decided to end contracts with Keiper and to go to court to get proprietary tooling back. There is no deadline to resume production so far, but tools are being installed at other suppliers.

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