Going off Montana’s article below. Volkswagen
is finding themselves in a slew of trouble after being found with technology
mechanisms in nearly 11million cars, which is said to falsify their emissions
test on diesel cars. The error resulting in cars polluting a larger portion
than accepted by the US Environmental Protection Agency. Yes, they are risking
huge fines but a new topic is how their market position is being crushed and
the impact it is having on the car industry’s shares as well.
Since the
news came out Volkswagen has lost nearly 1/3 of its market cap (roughly $30
billion) in both US and European markets alike. Volkswagen affiliates (Porsche,
Chrysler Fiat), while VW mediates current allegations, the company is still
seeing impulsive market losses as a result. BMW, a company who has diesel cars
reported almost an 8% loss to start the week. Additionally GM and Ford, who are
not even affiliated with the German car dealer have reported 2% and over 3%
market losses respectively, as a result. Additional engine and emission
controls manufacturers in the car industry particularly those associated with
VW have seen steep market reactions; BorgWarner losing 6% and Tenneco dropping
8%. While the industry is suffering as a whole due to Volkswagen’s mistake, VW
is bearing the biggest loss, shares dropped 20% on Tuesday alone. The following
shows the negative externalities the car market succumbs to as a result of one
automakers massive fraud. Additionally it will be interesting to see if VW
fires their CEO, Martin Winterkorn amidst the situation.
http://www.businessinsider.com/volkswagen-causes-widespread-auto-drop-2015-9
3 comments:
After reading this article:
http://money.cnn.com/2015/09/23/news/companies/volkswagen-emissions-crisis/
I found out that VW has already found a replacement CEO after former chief executive Winterkorn stepped down. The company has already set aside about $7.3B for recalls and will probably have to spend much more getting themselves out of this rut.
Just because the CEO stepped down doesn't immediately solve this problem. It seems like this issue is company-wide, and there will need to be a decent amount of firing/replacing to attempt to fix this company. VW should lose all credibility in the American market, and I'm interested to see if consumers will respond appropriately.
A lot of the problem within the company is how the CEO Winterkorn ran the business. He created a culture of fear within the company, so that employees would work harder and more efficiently for fear of losing their jobs. However, because this was the case, in order to ensure their job security documents were falsified so that these employees jobs would not be in jeopardy. While I think firing the CEO in order to create the type of work culture Volkswagen wants to have is a step in the right direction, I think as Emily said there is a lot more that needs to be done to fix this problem and to bring Volkswagen back to the top.
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