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Scandal at Volkswagen
Volkswagen’s shares tumbled by around a third following revelations by the US Environmental Protection Agency that the German car giant cheated on emissions tests in America.
Volkswagen's shares tumbled by around a third following revelations by the US Environmental Protection Agency that the German car giant cheated on emissions tests in America. The company's diesel cars had been fitted with software designed to allow car engines to release fewer smog-causing pollutants during the tests, compared to when cars were driven under normal conditions. As a result, the world's largest carmaker could face penalties of up to $18bn, in addition to criminal charges.
VW was ordered to recall almost half a million cars, and has revealed that up to 11 million of its vehicles worldwide could be affected. The production of affected diesel car models, including the Audi A3, Beetle and Golf, has been halted in the US. Martin Winterkorn, the group's CEO, apologised and ordered an external investigation, before stepping down on Wednesday. US Volkswagen chief Michael Horn admitted the company had "totally screwed up", while German economy minister Sigmar Gabriel expressed concern that the scandal could damage the German car industry. Credit rating agency Fitch placed the company's "A" credit rating on "negative watch", citing the reputational damage caused.
What the commentators said
But others doubt the breach is exceptional. "We need to ask the question is this happening in other countries and is this happening at other manufacturers?" said John German in The Guardian, who is a co-lead at the International Council on Clean Transportation, the non-governmental organisation that first raised the alarm about the scandal. Investors shouldn't hang around to find out what happens next, said Helen Thomas in The Wall Street Journal. "A change at the top could ultimately prove cathartic for investors. Meanwhile, they are confronting a morass of financial, legal, operational, managerial and strategic uncertainty. The sensible thing to do is to hit the road."
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Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with the latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Marina Gerner is an award-winning journalist and columnist who has written for the Financial Times, the Times Literary Supplement, the Economist, The Guardian and Standpoint magazine in the UK; the New York Observer in the US; and die Bild and Frankfurter Rundschau in Germany.
Marina is also an adjunct professor at the NYU Stern School of Business at their London campus, and has a PhD from the London School of Economics.
Her first book, The Vagina Business, deals with the potential of “femtech” to transform women’s lives, and will be published by Icon Books in September 2024.
