Volkswagen AG (ADR)(OTCMKTS:VLKAY) reported that it will submit the refit plan to the relevant authorities in the month of October. The CEO Matthias Müller said that the company will refit all the automobiles affected by software that can fix an exhaust-emission test. A project team will put forward a comprehensive action plan in the coming days and would inform clients shortly about refitting the vehicles.
Volkswagen stated that it would propose its technical solutions to environmental authorities and regulators for approval in October, and create websites to notify affected clients. The company was caught in an emissions issue after U.S. environment authorities stated that the company deliberately mounted software in some diesel-powered vehicles to pass emissions tests in the U.S. Since then Volkswagen had faced a $25 billion decline in its total market value, demands for clarification from regulators world-wide and a management shake-up.
Yesterday, the Volkswagen-brand car Chief, Mr. Herbert Diess, met with Elzbieta Bienkowska, the EU Industry Commissioner in Brussels to talk about the crisis. The commission informed that they expect company to explain the situation. The commission needs facts and wants to know the reasons behind the problem.
The future ahead
The emission scandal of Volkswagen emerged as a disturbing event last week. Volkswagen was identified to have manipulated the emissions measuring system of the cars and following the scandal, the stock has eroded nearly 1/3 of its total market cap in a matter of just six trading sessions. The big issue is whether the fall down of the stock has offered an investing opportunity or it is the time to stay away from VLKAY stock.
It should be noted that the market has already discounted 1/3 of the total market cap of Volkswagen, suggesting that the total loss for the company due to the ongoing scandal will be around $28 billion. Since the reported problem, the analysts have lowered their EPS projections for the company by nearly 69% for this year.
Volkswagen AG (ADR) (OTCMKTS:VLKAY) suffered a lot in the previous week and this week has not been an exception yet. The stock ended the last trading session with a comparatively minor loss of 2.71% and the volume remained a bit low too, as only 1.1 million shares changed hands against the daily average of 1.7 million. The long term picture of the stock shows a loss of about 55% in the last 6 months and that doesn’t shows any sign of stopping any soon. The 2011 low at $21.88 shows a great possibility of being retested, where a feeble bounce can be expected.