Worried suppliers to scandal-hit Volkswagen evaluate risks

Worried suppliers to Germany's scandal-hit Volkswagen have swiftly moved to evaluate downside risks, including the likely hit to their margins, from the fall out of the emissions test fraud that has embroiled the world's largest automaker.
A key supplier said the German multinational company may now have to come out with "offers" to customers to buy its products and it may, in turn, try to squeeze its suppliers to offset the "additional cost".
"We have a lot of business with VW," said a senior official from a company that has significant supplier exposure to the embattled car major.
"If they lose money... With this kind of image damaging... they can get it from customers. WV has to make offers to customers just to buy more again. They should get money from us also (hitting our margins)," he said on condition of anonymity as the issue is sensitive.

"There are some risks in it. We are just evaluating that. Not just finished yet. Many chapters (of the scandal) not written (as yet). We haven't seen the whole picture," the official said, indicating that the worst may not be over.
A top executive of another company said German politicians are "really upset" by the scandal and potential damage it could cause to image of Germany as a bastion of engineering prowess.

"If they (VW) get into trouble... Then, this country (Germany) will be affected," he said.
Chancellor Angela Merkel yesterday said the emissions scandal was "dramatic" but would not inflict lasting damage on Germany's reputation.

In an interview with public broadcaster Deutschlandradio ahead of her visit to India, Merkel stressed Volkswagen would now have to provide the "necessary transparency".
The scandal erupted on September 18 when US Environmental Protection Agency said the German automaker had cheated on tests of its diesel cars. The extent of the fallout from the scandal remains unclear as do the costs to Volkswagen.
Volkswagen AG has admitted using an engine device to cheat on diesel car emissions tests. It has said up to 11 million vehicles worldwide were fitted with the cheating device.
After the scandal hit headlines across the world last month, the company's longtime CEO Martin Winterkorn quit, but said he had no knowledge of any wrongdoing.

The scam has tripped more than 40 per cent off Volkswagen's market capitalisation. But it has vowed to get to the bottom of the scandal with an internal probe.