Guest essay by Eric Worrall
Volkswagen share prices have risen sharply in the last few days, apparently on the back of news that Volkswagen was already negotiating a settlement with the EPA, over the rigging of Volkswagen CO2 emissions tests, when the scandal broke.
According to CityAM, a prominent London financial paper;
In a testimony due to be presented to a panel of investigators at the House of Representatives today, Horn said the possibility was highlighted to him in a West Virginia University study in spring 2014.
“I was informed that EPA regulations included various penalties for non-compliance with the emissions standards and that the agencies can conduct engineering tests which could include ‘defeat device’ testing or analysis,” he said.
I was also informed that the company engineers would work with the agencies to resolve the issue.
Later in 2014, I was informed that the technical teams had a specific plan for remedies to bring the vehicles into compliance and that they were engaged with specific agencies about the process.”
There have been several positive articles about Volkswagen recently, such as the following article from Forbes;
Feeling Brave? Now Might Be The Time To Buy Volkswagen Shares
Some investors may raise their eyebrows at this advice. After all, Volkswagen’s Chairman-designate Hans Dieter Poetsch has warned that the diesel-emissions scandal could pose “an existence-threatening crisis for the company.”
Nonetheless Berenberg Bank analyst Adam Hull, in a published research note to investors, said now is the time to buy.
As Hans Dieter Poetsch indicated, until Volkswagen negotiates a firm settlement, the whole affair could still threaten the existence of the company. Any new release of bad news from EPA regulators could dramatically impact Volkswagen share prices. But a significant number of investors appear to think Volkswagen shares have been oversold, and are betting on a recovery in share value.
There doesn’t seem to be much concern that Volkswagen’s attempt to cheat the emissions test will significantly impact the consumer choices, of people who buy Volkswagens. Perhaps most car buyers are more concerned about look, feel and drivability, than
CO2 EPA emissions standards.
Corrected – EW