So we’ve been hearing about Volkswagen’s emissions scandal for a good few weeks now, but in case you’ve been hiding under a rock since 18th September, Volkswagen have been found to have rigged their emissions testing of their cars by implementing a ‘defeat device’ which alters the car’s performance when it is being tested. Let’s just say this has not gone down well with the Americans, our friends across the pond are big on their environmental impact (which can only be a good thing!), so this news will have impacted VW’s reputation pretty badly. The tests found that the actual emissions from these vehicles are 40 times higher than US regulations. Not exactly ideal when you consider that there are potentially 11 million of the German cars affected. Could be a hefty cost associated to that? Yep. Apparently, Volkswagen are putting aside £4.7 billion to cover the costs of the scandal. £4.7 billion sounds a pretty large amount, especially when you consider the value of VW is ‘only’ about £48 billion. Imagine losing 10% of the business down to a scandal which could so easily have been avoided. Oh, and did I forget to add that there could also potentially be $18 billion in fines from the US also.. I can only praise the new CEO for his courage in taking on that job!
So on one side, VW could be skint soon, they have to do something to sort out the 11 million affected cars that they’ve allowed onto the roads worldwide. Their share prices have also dropped massively (see below), $167.60 on 15th September to a low of $102.00 on 1st October. But on the other hand, who says all press is bad press? Is this scandal something that VW can recover from?
In October the share price has actually risen. Although it’s a relatively small amount and the share price shouldn’t really stay at it’s lowest, that should be more of an immediate response and build back up, as it has done.
This is hardly very ethical practice by an international company who were previously a well-respected company worldwide. Time will tell whether Volkswagen will fully recover from this scandal.
Do you think Volkswagen can fully recover from a scandal of this scale?
ReplyDeleteI think ultimately Volkswagen can recover from this scandal, however, I believe due to the scale of the emissions scandal it will take Volkswagen many years to recover their reputation. They have lost trust from their customers and will have to work in order to regain this trust and ensure that they can make sure their customers remain loyal and continue to purchase Volkswagen vehicles. They will have to ensure that they remain in constant communication with the public and work to make up for the issues that they have caused and the lack of honesty that they have displayed.
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