In September 2015 the US Environmental Protection Agency found that many VW cars being sold in America had a "defeat device" (software) that could detect when they were being tested. The group then confessed that eleven million of its cars were equipped with such defeat devices.
After this announcement, the share in Frankfurt collapsed and lose almost half of its value, dropping from €170 to €90 in two weeks. Stock market punished VW whose share hasn’t still risen up. Several small shareholders and institutional investors, who respectively owns 20% et 23% pressed charges for more than €8 billion of damages (1).
But consumers don’t really care about the cheat. Sales of brands concerned by the fraud (VW, Audi, Škoda and Seat) didn’t reduce in 2015. With a close look, VW sales decreased by 4% in 2015 (160.000 vehicles less sold a year). But this fall is regular from the last years. And the rise of Audi and Seat compensate the drop. Group sales even increase of 5% in the first 8 months of 2016, compared to same period of 2015.
The passenger cars revenues rose by 10% in 2015. Operating profit dropped down to €-7 billions due to provisions for sanctions. The group had an exceptional provision of € 16 billions.
Last Tuesday, October 25th, US Court has granted final approval to the $15 billions compensation agreement. The approval plans up to $10.000 compensation per vehicle in the US (2). The European Commission is still asking for a similar compensation that VW refuses even though more that 8 millions of cars had been sold in Europe.
Notes and references
(1) As of December 31st 2015, VW group main shareholders are Porsche (31%), Qatar (15%) and Lower Saxony State (12%).
(2) The $15 billions settlement agreement plans $10 billion compensation, $3 billion into an environmental trust and $2 billion investment in zero emissions vehicle. http://www.volkswagenag.com/content/vwcorp/info_center/en/news/2016/10/TDI_settlement_program.html
