European Parliament President Martin Schulz told a group of German regional newspapers that the emissions scandal at Volkswagen (VW) would hit the German economy hard, but Europe’s biggest automaker was likely to survive the crisis.
German ministers for finance and economy have played down the risk of a broader economic danger for the nation from the scandal.
“It’s a heavy blow for the German economy as a whole,” Schulz, a German Social Democrat, , was quoted as saying by the newspapers.
“It’s hard to believe what was done there negligently and possibly even with criminal energy. But I believe that Volkswagen is a strong company that has every chance of surviving the crisis,” he said.
VW has set aside 6.5 billion euros (US$7.2 billion) to help cover the cost of the scandal, but some analysts think the final bill could be much higher.
VW has said it will refit up to 11 million cars and vans containing the illegal software.
The auto industry is crucial for Germany, Europe’s largest economy, where the likes of BMW, Daimler and VW employ more than 750,000 people.
The German newspaper Welt am Sonntag cited Hans Dieter Poetsch, VW’s incoming chairman, as saying that the scandal is a threat to the firm’s viability, albeit a surmountable one.
At an internal company meeting last week at the VW headquarters in Wolfsburg, Poetsch said the situation was an “existence-threatening crisis for the company,” Welt am Sonntag reported in a release ahead of yesterday’s publication.
Poetsch also said that he believed VW could overcome the crisis, the newspaper said.
A VW spokesman declined to comment on the report.
Europe’s largest automaker has admitted cheating in diesel emissions tests in the US and the German Ministry for Transport and Digital Infrastructure said VW also manipulated tests in Europe, where it sells about 40 percent of its vehicles.
Moody’s, S&P and Fitch have all put negative outlooks on VW’s credit ratings, meaning they see a risk of downgrades.
Citing an unnamed insider, Welt am Sonntag said VW’s planned investment budget of 100 billion euros through to 2018 was under review for cuts.
Sources close to the board told Reuters last week the supervisory board was looking at ways to make savings to try to avoid a downgrade in the company’s credit ratings, which would lead to higher borrowing costs.
However, they said it was not talking about asset sales, after calls from some analysts for the firm to sell its trucks business or brands such as Bugatti, Ducati and Lamborghini.
VW also faces potential fines from regulators and prosecutors, lawsuits from consumers and investors and a possible hit to sales from the damage to its reputation.
A survey by German market research firm Puls showed 41 percent of consumers see the brand as damaged for the long term, while 11 percent say they no longer want to buy a VW, the Frankfurter Allgemeine Sonntagszeitung reported.
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