BERLIN – Volkswagen AG (ETR: VOW3) announced on Wednesday they had overestimated its struggles regarding its carbon dioxide emissions problem.
Last month the company admitted that, globally, 11 million diesel cars had been equipped with software that made them perfect to cheat at pollution tests. As a result, it said that 800,000 cars were affected by the problem.
However, the latest news is that only 36,000 cars, just a small fraction of the amount that had been originally thought, have shown irregularities with CO2 emissions, according to a research the company has recently carried out. The rest of the vehicles can be normally marketed and sold.
Whereas last month’s scandal implied that the company had to face costs of about 2 billion euros ($2.2 billion) that included compensations to customers, the new findings have led to an immediate increase in VW’s shares, which jumped up 7.3 percent at 133.05 euros. But the way the German giant auto manufacturer has been dealing the issue produces uncertainty among investors, regulators and motorists.
Nicolas Ziegelasch, head of equities at Killik, expressed that it is difficult to understand what is happening at the company because it has caused so much disinformation. “Without correct information about what is happening at VW, from an investment point of view the whole situation is so unbelievable and so badly handled as to make VW uninvestable”, the broker he said, as Reuters reported.
Moreover, the Wednesday’s news are unlikely to significantly improve the consumer’s confidence in the business, according to Ernst-Robert Nouvertne, who directs two VW dealerships near Cologne in Germany. He commented that the consumer will keep in mind that VW has failed to provide accurate emissions data and that it would not help solve the firm’s sales problems. On the other hand, NordLB analyst Frank Schope observed that VW’s sales problems seem to be decreasing but still predicted global sales would decline 4 percent in 2016.
As he resigned, former Chief Executive Martin Winterkorn declared he did not have any information about the decision to equip millions of cars with cheating devices. On Thursday, details might be revealed about the reasons why the company failed to discover the infringement, as current Chief Executive Matthias Mueller and Chairman Hans Dieter Poetsch will publish answers to the inquiries at 1000 GMT, according to Reuters. They will not name those responsible though.
Volkswagen emissions scandal broke in late September and the manufacturer has lost over €10bn from its market value.