CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Volkswagen shares tumble 20 on US diesel emissions scandal

Article By: ,  Financial Analyst
September 21, 2015 4:36 PM

Shares in German carmaker Volkswagen dropped more than twenty per cent after it emerged the company cheated on US air pollution tests for years.

They tumbled as much as 23 per cent to €125.40 (£90.85) in Frankfurt, wiping out £11.3 billion from the company's value.

Cynthia Giles, an enforcement officer at the US Environmental Protection Agency, said on Friday (September 18th) the cars in question "contained software that turns off emissions controls when driving normally and turns them on when the car is undergoing an emissions test".

The feature, dubbed a "defeat device" by the EPA, masks the true emissions only during testing. When driving, the cars emit as much as 40 times the level of pollutants allowed under clean air rules, she said.

The violations affect nearly half a million vehicles and could result in as much as $37,500 (£24,150) in fines for each vehicle not in compliance with federal clean air rules.

EPA says it has been "deceived"

“If this ends up having been structural fraud, the top management in Wolfsburg may have to bear the consequences,” Sascha Gommel, a Frankfurt-based analyst for Commerzbank AG, told Bloomberg.

The EPA said the carmaker used software for diesel VW and Audi branded cars that deceived regulators measuring toxic emissions.

Chief Executive Martin Winterkorn said yesterday (September 20th) he was "deeply sorry" for the breach of US rules and ordered an external investigation.

"I personally am deeply sorry that we have broken the trust of our customers. Volkswagen has ordered an external investigation of this matter," he said.

Meanwhile, vice chancellor and economy minister Sigmar Gabriel told Reuters he was concerned about the "excellent" reputation of German carmakers, saying Volkswagen's emissions manipulation was a "bad incident". 

A source close to the company added that any decision on emissions control mechanisms would have been taken at the group's Wolfsburg headquarters, and not by regional divisions.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024