BERLIN (Reuters) -- German Chancellor Angela Merkel told a German radio station that the emissions scandal surrounding German automaker Volkswagen AG was "drastic" but the damage was not so great that Germany was no longer deemed a good place to do business.

"I believe the reputation of the German economy and the trust in the German economy has not been shaken by this to the extent that we are no longer considered a good business location," the chancellor told Deutschlandfunk, according to the text of an interview to be broadcast Sunday.

Merkel said she hoped Volkswagen would quickly create transparency and sort things out.

(Reporting by Michelle Martin. Editing by Jane Merriman)