- 17 марта 2016, 22:25
- Zacks Investment Research
Share price of Volkswagen AG VLKAY increased 3% to $29.33 on Mar 16 due to an overall improvement in the industry even though media reports revealed that the automaker was sued for 3.3 billion euros ($3.7 billion) in Germany in relation to the emissions test scandal. This is the biggest legal challenge being faced by the automaker in Germany.
The case, filed on behalf of 278 institutional investors around the world, alleges that Volkswagen did not provide public information about the emissions scandal on time. Apart from this case, the automaker already has seventy cases pending in Braunschweig. Volkswagen is also facing many lawsuits in the U.S. as well as in other countries.
Earlier this month, Volkswagen announced that it intends to cut 3,000 office jobs in Germany by the end of 2017. The automaker is aiming at job reduction in order to offset the costs incurred due to the emissions test-rigging scandal. Volkswagen will also reduce investments by 1 billion euros ($1.1 billion) in 2016 compared to last year. The automaker further plans to discontinue unprofitable models in order to lower costs.
Volkswagen found itself in troubled waters after the Environmental Protection Agency (“EPA”) revealed that the company had developed a software algorithm to deceive U.S. emission tests. Volkswagen admitted to its diesel vehicles being installed with software that makes the engines appear to have low emission levels during tests. According to the EPA, Volkswagen vehicles emit nitrogen oxides, or NOx, at almost 40 times the standard amount. Nitrogen oxide emissions lead to smog and acid rain, and can cause serious health concerns like lung cancer.
Almost 11 million vehicles around the world – including Jetta, Beetle, Audi A3 and Golf from model years 2009–2015, and Passat of model years 2014 and 2015 – are fitted with this software. Of the total, 5 million vehicles have been manufactured under the Volkswagen brand and 2.1 million under the Audi brand.
Volkswagen currently carries a Zacks Rank #4 (Sell).
Stocks that Warrant a Look
Some better-ranked automobile stocks include Wabash National Corp. WNC, Federal-Mogul Holdings Corporation FDML and Superior Industries International, Inc. SUP. All the three stocks sport a Zacks Rank #1 (Strong Buy).
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VOLKSWAGEN-ADR (VLKAY): Free Stock Analysis Report
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WABASH NATIONAL (WNC): Free Stock Analysis Report
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