Billions Erased From Volkswagen's Value In Stock Slide
More than $17 billion has been erased Monday from Volkswagen’s value in shareholders’ eyes as the company awaits more fallout from news that the company cheated through emissions tests.
Volkswagen’s stock dropped more than 20 percent Monday after the German automaker announced it would stop sales of its diesel cars on Sunday. New CEO Martin Winterkorn issued a statement Sunday to apologize:
I personally am deeply sorry that we have broken the trust of our customers and the public. We will cooperate fully with the responsible agencies, with transparency and urgency, to clearly, openly, and completely establish all of the facts of this case. Volkswagen has ordered an external investigation of this matter.
According to Reuters, Germany said it would investigate the claims on its own.
“You will understand that we are worried that the justifiably excellent reputation of the German car industry and in particular that of Volkswagen suffers,” Germany’s Economy Minister Sigmar Gabriel told the company, according to Reuters.
German Transport Minister Alexander Dobrindt spoke with Winterkorn on Monday to see if the coverup extended to cars sold in Europe.
The automaker faces record fines of up to $18 billion from the U.S. government for its role in cheating through emission tests, and immeasurable damage to its reputation as a sustainable automaker.
Separately, VW said it would suspend development of its 10-speed DSG automatic transmission — slated for many of its diesel vehicles — due to rising costs. The gearbox was rumored to be included in the next-generation Passat.
More by Aaron Cole
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Good time to buy VW stock.
I think, sooner or later we will be presented a small group of sheepish-looking engineers who say that they did what their design parameters told them, i.e. build an engine that passes the required emmissions tests, not one that is clean when driven on the road. I think there are two possible explanations for this kind of thing happening: A small group of engineers conspiring to rigg the test or a larger group thinking that what they're doing is not wrong ("we have to build engines that pass the test, not engines that run clean on the road."). And the lawyers may end up having a field day, if the emissions requirements are poorly phrased.
20% stock drop in one day! Anyone with shorts on VW must be laughing to the bank.
Two things: 1. I get the point is that they cheated. But how much more pollutant are we talking versus all the big trucks and other diesel powered stuff already out there? 2. So they can't sell any new TDIs at the moment. How will it affect the used ones? Price goes up due to lack of new ones vs price drop due to overall consumer impression of the brand? Me, I'm waiting (hoping?) until they get a fix done and then have a bunch of 2015 Audi TDIs they need to clear out because of cancelled orders.