John Stahmann

The following is the text of a letter sent to VW/Audi Dealers on December 23, 1999

"TO: Volkswagen and Audi Dealers, Volkswagen and Audi Parts and Service Managers
Subject: Parts Supply Up-Date

The intent of this communication is to provide each Volkswagen and Audi Dealer an update on the current situation. First of all, each dealership should understand that everyone associated with VWoA, Audi of America, Volkswagen Canada and Audi Canada completely understands the seriousness of the parts shortage situation and the impact is has on your customer base.

With that said, each of you should understand the measures that have been taken most recently to correct this unacceptable situation.

- SAP System problems in Kassel are being worked on daily by all available resources in Germany.

- Kassel Warehouse has introduced the following measures to expedite U.S. and Canadian Parts:
- A container pool has been established to reduce reaction time for sea freight orders.
- All incoming goods are received on a priority basis with extra personnel in Kassel.
- Extra warehouse space has been rented to accomodate space intensive parts. Manual receiving and packing procedures have been implemented while the system is being worked on.
- Twenty extra employees have been put in place in the receiving area to handle the incoming goods received in Kassel.
- Inventory accuracy has been validated on over 30,000 parts in the last two weeks.
- Kassel inventory department is making special efforts to follow-up with suppliers who are behind on parts shipments. Specific actions taken for the U.S. and Canadian markets are as follows:
- Select identified backordered parts will be packed at the suppliers and shipped directly to the U.S. and Canada by-passing Kassel. Other parts are being identified for this special action currently.
- With the Audi production shutdown for the holiday, Kassel with be receiving more of the spare parts they need.
- A Special Car Down Task Force has been introduced at Audi Ingolstadt to handle critical shortages one by one.
- VWoA has been given access to the SAP System in Germany to improve our ordering efficiency.
- Additional airfrieght will be shipped to VWoA/C on a priority basis until the shortage situation in eliminated
- Nine charters including three 747's have been shipped and received in the U.S. and Canada prior to Christmas.
- The Top 200 Parts Back Order list has been reduced by 121 parts as of Christmas with the hard work of Germany and U.S. Teams who have reviewed each part in detail.

In summary, what does all this mean?

First, we understand the pain these parts shortages are causing the market place. Extensive efforts are being made daily to correct the situation. All manpower is directed at solving the problems, however we will not be able to eliminate the situation overnight.

Your cooperation and understanding are greatly appreciated. We'd ask that as critical situations develop please contact your local parts depot to handle these cases one by one.

As always, feel free to contact XXXXXXXXXX at (XXX)XXX-XXXX for any questions you may have.

Thanks again for your understanding,

XXXXXXXXXXXX"

John's notes - I intentionally left the name and number off the posting. Don't ask for it, 'cause you won't get it.

Sounds to me like VW/Audi are trying to do everything in their power to get parts over to us. I personally have 9 parts on back-order, so I'm hoping that the efforts pay off soon!

John