USA Porsche imports held up over banned 'Western Chinese' part

[Porsche News]

USA Porsche, Bentley and Audi imports held up over banned Chinese part​

Thousands of Porsche, Bentley and Audi cars have been impounded in USA ports after a supplier to parent group Volkswagen found a Chinese subcomponent in the vehicles that breached anti-forced labour laws. According to two people with knowledge of the matter, the carmaker has delayed delivery of the vehicles until as late as the end of March as it replaces a key electronic component that was found to have come from “western China”.

The people stressed that VW was not aware of the origin of the part, which was sourced by an indirect supplier further down its supply chain, until the supplier alerted it to the issue. They added that VW notified USA authorities as soon as it was made aware of the part’s origin. The USA prohibits the import of products that have been made with forced labour in the western Xinjiang region and other areas in China under the Uyghur Forced Labor Prevention Act of 2021.

The people would not confirm whether or not the part in question was produced in Xinjiang itself. The issue affects about 1,000 Porsche sports cars and SUVs, several hundred Bentleys, and several thousand Audi vehicles, according to people briefed on the details. VW declined to comment.

Questions around forced labour found within its Chinese supply chain are particularly sensitive for VW, which has been facing mounting pressure from human rights groups and investors alike over a facility it jointly owns in Xinjiang’s capital, Urumqi. The German car company on Wednesday said it would discuss “the future direction of business” in the Xinjiang region with its Chinese joint venture partner SAIC, following the publication of fresh allegations of forced labour in German media.

Chinese officials have defended work programmes in the region as helping employment, but the UN’s top human rights body has said China’s actions may constitute “crimes against humanity”. A Human Rights Watch report this month warned that carmakers were at risk of buying aluminium produced by victims of forced labour in the region.

In mid-January, VW discovered that some of its luxury cars bound for North America contained a part that was not compliant with USA customs rules, two people with knowledge of the matter said. The part had been sourced by a supplier further down the company’s supply chain and not by VW directly, according to the people. Typically carmakers deal directly with their largest suppliers and may sometimes be unaware of the provenance of smaller parts produced by other businesses further down the supply chain.

A letter from VW to waiting customers blamed “a small electronic component that is a part of a larger control unit, which will be replaced”, but did not specify the origin of the part. With the approval of USA customs authorities, the company ordered replacement electronic modules, and has already begun fixing cars, two people said. While some were fixed last week, the backlog is unlikely to be cleared until at least next month. Swapping the modules is relatively straightforward and does not require the disassembly of the vehicles, although some more complicated models may take several hours to fix, according to people with knowledge of the process.