Spotlight: Volkswagen scandal likely to impact auto industry's future: Italian experts

The Volkswagen scandal will likely have a ripple effect on economic subjects involved in the Volkswagen supply chain, and an even wider impact on automotive industry's future strategies, Italian experts said.

The sales of all Volkswagen cars might be affected, after the company was caught cheating emission tests in the Unites States and Europe; and this potential loss would add to billions the automaker is likely to have to pay in fines.

The scandal of such a big company may hit the whole production chain, which involves Italian and other foreign suppliers, said Cesare Pozzi, a professor at LUISS University in Rome.

The worst in all this scandal was perhaps it would has impact on a number of "guiltless" subjects who are not directly responsible for the abuse, such as firms working with Volkswagen, said Pozzi, who is also an expert on regulatory and antitrust issues.

"We are talking about one of Europe's largest carmakers, and the automotive is among the most relevant industries in terms of research and employment," Pozzi told Xinhua.

Companies in Germany, as it often happens in many countries, are expected to react with a "strong sense of belonging" to the scandal, and rally around their national interests. Foreign suppliers might become highly exposed if the crisis will require Volkswagen to slash costs.

"I would not be surprised to see them cutting on foreign suppliers," Pozzi said.

Italian Economy Minister Pier Carlo Padoan has recently expressed the same concern, though in more veiled tones.

"This scandal is so serious because it hit hard confidence, upon which long-term investments and household spending depend," Padoan said.

"I hope the consequences will be limited, since they might have a ripple effect on the Italian industry sector," Padoan said.

The sales of Italian Volkswagen suppliers is worth some 1.5 billion euros (1.68 billion U.S. dollars) per year, according to the Italian Association of Automotive Industry (ANFIA).

The association said it could not yet estimate the overall impact on such companies, since information available so far were not enough.

Yet, subsuppliers must also be considered in this account, as well as former Italian companies bought by the German automaker but still based in the country, such as design firm Italdesign Giugiaro.

Overall, the automotive sector employs about 1.2 million workers in Italy, some 265,000 of whom are directly involved in vehicle production, according to ANFIA.

The "dieselgate" affair, as some Italian media labelled it, would also affect the future of diesel cars at the global level, said Gianni Silvestrini, scientific director of non-profit organization Kyoto Club.

"I would say diesel cars will have no future anymore in the U.S. market, where they already were marginal," said Silvestrini.

"In Europe they will face a consistent decrease, especially to the benefit of hybrid and electric models," said the expert in green technologies and energy efficiency.

The Volkswagen scandal might become as serious for the automotive industry as the 2011 disaster at Fukushima power plant in Japan had been for nuclear energy, said Silvestrini.

"The scandal will force all major automakers to review their strategies deeply, and re-orient their financial resources," Silvestrini noted.

"The global attention is now focused on emissions rigging, but the debate is already widening to the testing scheme for fuel consumption and CO2 (carbon dioxide), which are also suspected to be underestimated," Silvestrini added.

Independent research has in fact denounced a growing gap between stated and real fuel consumption in all major car brands.

"The real fuel consumption and CO2 emission during road driving would be 20 percent to 40 percent higher than what official tests show," he said.

A systematic overhaul in both emissions and fuel performance tests is therefore foreseeable in the near future, and this would strongly boost more environmental friendly models.

From this point of view, the scandal might bring about a positive change.

"It is worth noting that outsiders like Tesla, Google, or Apple are appearing on the electric car market, and this new scenario will likely impact on the strategies of carmakers like Fiat-Chrysler Automobiles, which have not believe much in the electric sector so far," he stressed.

The deception unveiled by the Volkswagen scandal would represent a failure in terms of corporate social responsibility.

Pozzi, the LUISS University professor, said that such behavior has much to do with a model of capitalism and running business where powerful professional managers instead of entrepreneurs have control.

"A certain idea of the role a company must play in its own territory, which the so-called 'Rhine model' or German capitalism had very clear in mind, has got quite lost," Pozzi said.

"The figure of the entrepreneur as a person who invests and makes profit, but also bears risks and social responsibilities of his own business, does not exist more."

Such development has worked well for a country such as the United States, but not for Europe, he said.

"The American choice based on a public company run by professional managers has posed no problem to the U.S, but it certainly did to Europe, because we do not have their same framework of regulatory and legal protections," the economist added. Endi