Volkswagen has cautioned employees that production slowdowns may be unavoidable in the coming weeks as supply chain pressures mount across Europe’s auto industry. The warning comes amid escalating tensions surrounding Dutch semiconductor manufacturer Nexperia, whose recent seizure by the Dutch government has disrupted the flow of crucial components to European carmakers.
In an internal letter to staff, Volkswagen said that while production has not yet been directly affected, the situation remains highly uncertain.
“In view of the dynamic situation, we cannot rule out an impact on production in the short term,” a company spokesperson told Reuters.
Nexperia Dispute Strains Europe’s Auto Supply Chain
The Dutch government took control of Nexperia a Chinese-owned semiconductor firm last month, citing concerns over intellectual property and national security. In response, China imposed export restrictions on certain finished chip products, tightening supply lines to European automakers that rely heavily on Nexperia’s components.
Although Nexperia’s chips are relatively low-tech, they are produced in massive quantities and play an essential role in modern vehicle manufacturing. The disruption has already raised alarms within the European auto industry, which remains vulnerable after years of global semiconductor shortages.
Production Pauses and Contingency Planning
German newspaper Bild reported on Wednesday that Volkswagen may begin halting production as early as next week, starting with its Golf series, followed by other models. The company has neither confirmed nor denied these claims, dismissing them as speculation but acknowledging that contingency planning is underway.
Separately, Volkswagen confirmed it will temporarily pause production of its Golf and Tiguan models at its Wolfsburg headquarters this Friday due to an unrelated inventory issue. The automaker emphasized that the pause is not connected to chip supply concerns.
According to Bild, Volkswagen has also held preliminary discussions with labor authorities about the potential introduction of a reduced working hours scheme (Kurzarbeit), which could affect tens of thousands of employees if the chip supply situation worsens. VW declined to comment on those reports.
Broader Industry Impact
The Nexperia dispute has become a flashpoint in the broader trade tensions affecting Europe’s manufacturing sector. Alongside U.S. import tariffs and China’s export controls on critical materials such as rare earth elements, the standoff is threatening to slow vehicle production and increase costs across the region.
Major automakers including BMW and Mercedes-Benz have also confirmed they are working with suppliers to mitigate risks and secure continuity of production. However, a lasting solution remains elusive.
Dutch and Chinese economy ministers held talks this week to resolve the impasse but failed to reach an agreement.
For now, Europe’s automakers are bracing for potential production delays as the geopolitical struggle over semiconductor supply chains continues to unfold.
