Volkswagen emissions scandal resonates in Slovakia

THE SCANDAL related to Volkswagen diesel engines that cheated US air-pollution is making waves in Slovakia as the German carmaker operates the oldest of the country's car making plants in the capital of Bratislava.

Volkswagen Slovakia Volkswagen Slovakia (Source: Sme)

While the Slovak cabinet will wait for the next steps to be taken in Germany and at the EU level, officials at the Slovak plant have yet to comment. It is not clear yet whether cars with engines with installed with the flawed, misleading devices are driving on Slovak roads.

The scandal pertains to about 11 million cars with the diesel engine manufactured between 2009 and 2015 including Jetta, Beetle, Gold, Audi 3 and Passat. The German government has already ordered a through scrutiny of VW cars with diesel engines. Based on those results  the Slovak Transport Ministry, which has been only monitoring the situation for now, might also call for checks.

The Slovak arm of VW has refused to comment on the situation. The Czech carmaker Škoda, member of the Volkswagen concern, has admitted that it used the type of engines in which the cheat was proven, but it has not said whether the illicit software was installed into these cars, the Denník N daily wrote.

Experts do not expect any significant impacts car manufacturing in Slovakia.

“I do not see any economic reason for this,” economist Vladimír Baláž from the Institute for Forecasting of the Slovak Academy of Sciences told the Pravda daily. “The Bratislava plant makes up a small percentage of the whole turnover of the Volkswagen concern and due to low production costs it is highly profitable.”

But Baláž as well as Kamil Boros, analyst with X-Trade Brokers admit that a fine estimated at $18 billion might be very painful for the carmaker.

“If this happens [VW will have to pay the fine] of course Volkswagen will have less money for payment of dividends, which could motivate many investors to sell shares,” said Baláž.  

The question remains what an impact the scandal will have on the trust of clients of the German carmaker. Experts expect that the market would recover from the scandal recalling problems that other carmakers have experienced.

“In our opinion VW will not the lose trust of clients,” Boris Tomčiak, analyst with Colosseum told Pravda. “It cheated in emission checks which most of clients do not consider as the most important when choosing a car. It’s just enough to recall the scandal in Toyota some years ago. At that time it had a problem with unintended acceleration, what was certainly a more serious defect. Clients did not buy Toyota for some months but afterwards they returned.”    

Baláž pointed out that German carmakers have enjoyed a high trust of clients so far.

The Volkswagen Slovakia plant is one of the country's biggest private sector exporters, investors and employers. It manufactures cars Volkswagen Touareg, Audi Q7, Volkswagen up!, Volkswagen e-up!, SEAT Mii, Škoda Citigo, bodies for Porsche Cayenne and gear boxes. At the end of 2014 it employed 9,900 people. Last year it manufactured 394,000 cars while VW made 10.2 million cars worldwide, the Sme daily wrote. 

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Theme: Automotive


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