Between 2009 and 2015, the German car manufacturer Volkswagen reportedly sold nearly 1 million vehicles with distorted pollution systems. Basically, the Non-Governmental Organization, the International Council on Clean Transportation,
was intended to show that the vehicles sold by the German company were less polluting than the others. It was by testing them that this deception was revealed.
Back to the Volkswagen scandal
Analyses have shown that diesel cars are equipped with advanced software capable of reducing the actual nitrogen oxide emissions released into the atmosphere. As a result, the Volkswagen affair, or Dieselgate as it is commonly known, has become a global scandal.
On the day the Dieselgate deal was revealed, Volkswagen lost nearly 14 billion market capitalization, or nearly 16.5% of its price in one day. Having failed to inform the markets early enough, the car manufacturer is also suspected of price manipulation. As a result, the German giant’s sales fell by nearly 10 million vehicles in 2015, a first in 13 years. On the other hand, 16.2 billion euros had to be set aside to compensate for the cost of the scandal in the United States. A hard blow for the automotive company.
Although everything is to his disadvantage, Volkswagen’s first quarter of 2016 was better than expected. With an operating result of 3.4 billion euros, the German firm is said to have exceeded the most optimistic forecasts on its subject by 250 million euros, showing that the company is still solid and that it will not let itself down. In any case, investors will notice these performances and will not be indifferent to them. This suggests that Volkswagen’s share price is likely to rise again.
A technological shift towards electricity
Although it has lost nearly a quarter of its value, the German firm will have to effectively optimize its portfolio of activities if it is to be ready to transform its image after the Dieselgate scandal. Indeed, the group would need nearly 10 billion euros by the end of 2015 in order to implement a transformation oriented towards electricity. All brands and activities will have to be modified and solicited.
In order to buy back its image, the group aims to launch the production of nearly 30 new electric models in the next ten years or so. This image is completely different from the one that sticks to the skin of a “pollution scammer”. The German group wants to buy itself out and plans to reduce its commercial and administrative costs to less than 12% of its turnover and forecasts an operating profitability of 7% to 8% by 2025.
It will therefore be a good idea to monitor Volkswagen’s share price in order to be ready to invest when the time comes if the car company’s objectives are achieved. Volkswagen has lost a lot of money in this business and wants to make up for it. It is worth noting that to achieve this, significant changes will take place within the group. This suggests a possible positive evolution of the VOW3 share price.
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