Volkswagen causes platinum chaos
On Wednesday Volswagen said that its CEO Martin Winterkorn would leave the firm. It emerged earlier this week that Volswagen had cheated on emissions tests designed by the EPA. The firm installed special software that made it change its emissions profile while being tested. While on the road, however, the emissions were above levels mandated by law.
The fact that the engines Volkswagen cheated on are diesel may not be very important, but the platinum market is feeling the pain this morning.
David Govett, who is in charge of precious metals at Marex Spectron told the Wall Street Journal on Wednesday that it might cause a shift away from diesel. “People are going to start saying ‘Actually, we shouldn’t have diesel cars, let’s head toward petrol or electric’,” he said.
Car building accounts for about 30 percent of all platinum demand in the world. The metal is used in order to make diesel more environmentally friendly and comply with emissions standards. Its use also makes the engines much more expensive.
Simona Gambarini of Capital Economics said this morning that “It’s likely that diesel cars will be a lot more expensive because they require a lot more PGMs [platinum derived material] and sophisticated technology to make them comply with the new regulation and that could be the real game-changer.”