About 2 million of the 11 million diesel engines involved in the Volkswagen-Audi emissions scandal were manufactured at the Audi plant in Győr, in western Hungary. Mihály Varga, Hungary’s Minister of Economy, said that his government was already in talks with German car manufacturers to assess the potential impact on Hungary’s economy. (See the Reuters report here.)
He has good reason to be nervous. Twenty-two percent of Hungary’s industrial production and 13 percent of the country’s total export depend on the car industry. Hungary’s two largest car manufacturing plants are German owned: the Audi factory in the city of Győr and the Mercedes factory in Kecskemét. According to media reports, Daimler-owned Mercedes is also suspected to have misreported fuel economy numbers. (Read here)
The Audi brand is part of the Volkswagen Group and the Győr plant employs about 13,000 people and also have numerous subcontractors. They operate a giant motor factory where millions of engines are assembled, among them the implicated EA189 “clean diesel” engine. VW chief Martin Winterkorn and Prime Minister Viktor Orbán are close; Mr. Winterkorn is a frequent guest in Budapest.
Former VW chief Mr. Martin Winterkorn was a frequent guest of Prime Minister Viktor Orbán.
Did the Hungarians know about the VW emission trick? Probably. VW management was aware for a long time that the company was installing emissions-cheating software and it is hard to imagine that the local engineers were kept in the dark; this was a large scale corporate deception. The engines were intentionally designed and equipped with so called “defeat devices” which enabled the cars to pass emissions tests, even though in normal operation they spew 40 times more than the legal amount of pollution-causing nitrogen oxide.
VW and Audi have already halted sales of several models and it is expected that there will be more scale backs in Hungary where the economy is already slowing. I expect that the scandal will result in cuts of Hungary’s fourth quarter GDP projections.
Audi Hungaria boss Mr. Rupert Stadler, Prime Minister Viktor Orbán and VW boss Mr. Martin Winterkorn at happier times.
In June 2013, Mr. Orbán gave a speech at opening of the new Audi manufacturing plant in Győr. He said: “Audi is an excellent example of the success that Hungarian and German people can achieve if they work together. We, Germans and Hungarians, have undertaken many things together on many occasions during the course of our history. We have achieved excellent results in the interests of many good causes. What is happening here today is good for Hungary, good for Germany, and good for the whole of European civilization.”
Not according to German prosecutors. They recently initiated a criminal investigations against former VW boss Mr. Winterkorn, they suspect that he misled the public about his company’s activities.
György Lázár
