The recent automotive news regarding Volkswagen’s diesel cars has certainly raised a number of eyebrows among the trader and investment community. The issue revolves around software installed on millions of cars to “pass” emissions, specifically Nitrogen oxides (NOx). In recent days, numerous analysts submitted a number of scenarios and possible ramifications for the company.
The US, arguably the more stringent regulatory body when it come to emission control and fines, may be a significant burden on the company should litigation come to fruition. Since the preliminary agency and international government investigations have just begun, the investment community will continue to see various types of findings and opinions surface relating to this news.
We already have seen support for VW come in the form of balance sheet analysis and the ability of the company to weather the impending storm. Still, a few domestic and international tidbits to keep in mind as traders and investors absorb the barrage of information. VW has numerous production plants in 20 European countries. VW is a major employer in Germany. VW automobiles are sold in a number of locations including North America, Europe, Africa and China.
A number of elements with respect to the automotive industry that the capital markets community is keeping a close eye on: Where did this deception begin and who was aware of this issue? Have other car companies adopted the same or similar types of software for the purpose of “passing” emissions? What impact will this have on diesel automobiles? What impacts, short and/or long term, will this have on hybrid and electric vehicle sales? How will VW handle public opinion during investigations and televised punditry?
We will continue to monitor the VW situation close as is related to volatility, price action and the flow of information.
