A supplier of parent company Volkswagen discovered a Chinese component in Porsche, Bentley, and Audi vehicles that violated laws against forced labour.
Two people who are familiar with the situation say that the automaker is delaying the delivery of vehicles until the end of March to replace an electronic component which was found to be from “western China”.
People said that Volkswagen did not know the source of the part until it was alerted by the indirect supplier.
VW informed the US authorities of the origin as soon as they became aware.
US China relations are in the worst condition since 1979, when diplomatic relations were established between the two countries. Washington and Beijing are trying to stabilize their relationship after the November summit between President Joe Biden of the United States and his Chinese counterpart Xi Jinping.
Under the Uyghur Forced Labor Prevention Act 2021, the US prohibits importation of products made using forced labour in western Xinjiang and other areas of China.
They refused to confirm if the parts in question were produced in Xinjiang.
According to those briefed about the details, this issue affects approximately 1,000 Porsche SUVs and sports cars, several hundred Bentleys and several thousand Audis.
VW issued a statement in which it said that “it takes allegations of violations of human rights, both within its company and the supply chain, very seriously”, including “any accusations of forced labor”.
The statement continued: “We have investigated the matter as soon as we learned of allegations against one of our subsuppliers. We will investigate the matter and take appropriate action after we have clarified the facts. If our investigations reveal serious violations, we may terminate a supplier’s relationship.
VW is particularly sensitive to questions about forced labour in its Chinese supply chain. Human rights groups as well as investors have been increasing pressure on the facility that it owns jointly with Xinjiang’s capital Urumqi.
After the German media published fresh accusations of forced labor, the German auto company announced on Wednesday that it would discuss the “future direction of business” with its Chinese joint-venture partner SAIC.
Chinese officials defended the work programs in the region, claiming that they helped create jobs. However, the UN’s leading human rights agency has stated that China’s actions could be considered “crimes against mankind”.
Human Rights Watch warned carmakers this month that they could be buying aluminum produced by forced labor victims in the region.
VW balances falling sales in China against a desire to expand its presence in the US, at a moment of increasing political tension between both countries.
VW discovered in mid-January that some of its luxury vehicles bound for North America had a part which was not compliant to US customs regulations, according to two sources with knowledge of the issue.
According to the people, the part was sourced from a supplier lower down in the supply chain of the company and not directly by VW. Carmakers usually deal with their biggest suppliers, and are unaware of the origin of smaller parts made by businesses further down in the supply chain.
In a letter sent to customers waiting for their cars, VW blamed a “small electronic component which is part of a bigger control unit that will be replaced”, without specifying the origin of the piece.
Two people confirmed that the company had ordered electronic modules and begun fixing cars after receiving approval from US Customs. Some cars were repaired last week but the backlog will not be cleared before at least next month.
According to experts, swapping the modules can be done without disassembling the vehicle. However, some models that are more complex may take several hours to repair.