PRAGUE -- Wild swings in the Czech currency are hitting VW and its Skoda unit hard.
The fluctuation of the Czech crown hit profits in 2008. It was also cited by Volkswagen as the reason it will not build the Up minicar at Skodas plant in Vrchlabi.
Appreciation of the Czech crown peaked at 22.9 crowns to the euro in July 2008. Since then, the currency has fallen by nearly 25 percent against the euro to 28.6 and is expected to slide further.
You cant trust the currency. It is not stable. Of course it would be better to have the euro, Skoda spokesman Jaroslav Cerny said.
Cerny added that Skoda has not benefited from the better exchange rate because of the drop in sales.
If you are not selling cars, the exchange rate does not matter, Cerny said.
By contrast, Slovakia entered the euro zone on January 1, replacing the Slovak crown with the euro. It could be the main beneficiary of the Czech crowns swings.
Adopting the euro may have helped Volkswagen in Bratislava get new business. Late last year, VW was granted investment incentives for its 299 million plan to make two new car models on its AOO platform.
VW spokeswoman Daniela Rutsch cautioned that VW has not decided whether it will build the new small family of vehicles in Slovakia yet, but added that the call will be made in the next few weeks.
As the biggest Slovak exporter, the euro will have a positive impact on our company, Rutsch said
She listed four primary benefits: Elimination of exchange rate changes against euro, decreasing the number of bank accounts and bank fees, more planning stability, and simplified transactions inside VW group.