The MNB noted in its quarterly Inflation Report, released yesterday, that Audi Hungaria, the VW Groupʼs unit in Hungary, accounted for 7.8% of the countryʼs exports and 1.4% of GDP last year.

As Audi Hungaria is no longer making the rigged engines, the direct effect stemming from the ban on their sales “might be negligible”, but damage to the brand could reduce sales, and fines and refitting costs could squeeze VWʼs resources for investments, the MNB said. Although if VW seeks to cut production costs, the Audi plant in Györ, northwestern Hungary, could be at an advantage, considering its relatively low wage costs, the central bank added.

The MNB conceded that the impact of the scandal on the performance of the VW Group “cannot be estimated precisely” but it noted that Toyotaʼs market share in Europe fell by one-fifth after it was forced to recall millions of vehicles in 2009-2011.

The MNB said it had not considered the impact of the scandal in its baseline scenario in the fresh Inflation Report, but it did examine the possible negative scenarios.