Volkswagen is set to suspend production of the Golf at its Wolfsburg plant in Germany from 29 October owing to a renewed microchip crisis sparked by a US-China trade dispute.

News of the pause in production for one of Europe’s best-selling passenger car comes just hours after the German car maker issued an internal warning to workers about potential production disruptions.

The indications are that the halt to Golf production will be followed by stoppages for at least three other models, including the Tiguan, Touran and Tayron, also built at Volkswagen’s Wolfsburg facility. The company has not indicated how long production could be halted. 

A warning of potential production stoppages was officially raised in a letter sent to Volkswagen workers earlier on Wednesday morning. It stated that while production was "still unaffected," impacts "could not be ruled out at short notice" due to the "dynamic situation."

The crisis stems from a supply freeze of microchips from Nexperia. 

After the Dutch government, under pressure from the US Trump administration, took control of the Netherlands-based company last month, the Chinese government retaliated by banning the export of the company's chips.

The Dutch government takeover was enacted on 30 September, with officials citing intellectual property concerns due to its Chinese ownership.

The move has created immediate ripple effects and Volkswagen has confirmed it was notified by Nexperia that it can no longer guarantee the long-term delivery of microchips.

Volkswagen is claimed to have no immediate alternative microchip supplier. Semiconductors and microchips from other suppliers would require lengthy internal testing and certification before they could be used, Autocar has been told.

Production stoppages across Volkswagen’s other German factories in Emden, Hanover and Zwickau have not been ruled out as chip inventories dry up.  

In preparation for production disruption, Volkswagen has already initiated discussions with German government officials regarding the implementation of Kurzarbeit (short-time work), a subsidised scheme to avoid mass layoffs.