Will Škoda Auto take hit from Volkswagen emissions scandal?

Car maker Volkswagen’s woes are piling up from the false emissions scandal. And they are now affecting key subsidiaries such as the Czech Republic’s biggest motor manufacturer Škoda Auto.

Photo: Andy Greeenhouse / freeimages

If it was judged by mileage or staying power, the scandal around German carmaker Volkswagen’s falsification of emissions and efficiency would put it in a class of its own. More bad news keeps seeping out and piling up.

In the latest instalment, Volkswagen said that the scandal which at first mainly affected diesel cars now looks like hitting petrol powered cars as well with carbon dioxide measures also affected. Cars from Volkswagen subsidiaries Škoda Auto, Audi, and Seat also in the falsification frame. Altogether, around 800,000 cars in Europe could now be added to the problem parking lot and an extra 2 billion euros.

Jan Bureš|Photo: Tomáš Adamec, Czech Radio

Some analysts have seen the silver lining in the latest news as being that there is now one less car category and emission that Volkswagen and its subsidiaries might have to admit to having falsified. So can things get much worse for Volkswagen and what could be the downside for wholly owned subsidiary Škoda Auto? We talked to the chief economist of Poštovní Banka Jan Bureš.

“Things are clearly getting a bit worse with the latest news about Volkswagen but the strategy now is basically quite clear, to get rid of all the potentially negative surprises in the future and to play the game as transparently as possible. In the long term this is probably the best strategy.”

And Bureš says that Škoda Auto should not be hard hit if parent company Volkswagen starts looking hard at its future group investment plans. To sum it up, he says the Škoda Auto investment plans could be part of the solution in steering a path out of the current problems.

Foto: Škoda Auto

“There will be an impact on certain projects because of the crisis. Nevertheless, I believe that the Škoda brand itself is not probably going to be under such huge pressure as the Volkswagen brand. Besides that, I believe that the investments that are planned here in Škoda factories, that here is a strong business case in several investments and therefore profit opportunity for the future. These are profits that can somehow help in the future to deal with the current problems.”

The latest figures from the Czech market show Škoda Auto confidently holding onto its around third of the local market for new car sales. Figures out Thursday though showed a 3.0 percent slip in Škoda Auto’s October sales in Great Britain which came in at just under 5,000 cars. The British sales have been steady over the previous nine months.