The scandal swirling around Volkswagen will inevitably have an impact on other diesel vehicle makers. VW’s claims of a clean diesel engine now appear to be based on little more than deceit, and it calls into question the claims of every other diesel car maker.

That is not good news for platinum. If sales of diesel cars drops significantly, the already depressed commodity price for platinum will get hammered again. About 44% of global platinum demand comes from automakers that use the metal to lower the amount of pollution emitted from diesel engines. On Tuesday, platinum prices dropped nearly 4%, the largest decline in more than two years.

Most of the world’s platinum is mined in South Africa and Russia by mining giants like Lonmin and Anglo American. There is a single platinum mine operator in the U.S., Stillwater Mining Corp. (NYSE: SWC), with a mine in south central Montana. The company recently said it would fire 119 employees after failing to negotiate a new contract with miners. Stillwater’s best offer included two-years with no wage increases.

The slightly better news for the platinum group of metals is that demand for palladium is expected to remain where it is or get slightly better. Palladium is used in emissions control systems in gasoline-powered vehicles, and sales of those are expected to rise as consumers shy away from diesel cars.

Spot platinum prices rose Thursday morning from Wednesday’s close of $931 an ounce to around $351, before dropping back to about $941. Platinum prices have dropped from $1,312 over the past 12 months and reached a high of around $1,900 an ounce in 2011.

Spot palladium has risen from $622 an ounce on Tuesday to around $653 Thursday morning. Palladium’s 12-month high is $826 and its five-year high is $908, a level it reached late last summer.

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