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Volkswagen Emissions Scandal: California Wants New Recall

California air quality regulators issued a notice stating that German automaker Volkswagen AGVLKAY needs to announce a recall for another 16,000 diesel vehicles. The authority demanded the additional recall as it considers that more Volkswagen vehicles do not meet emissions standards.

The authority detected that vehicles with the 3-liter, V-6 diesel engines are equipped with illegal emission software which discharges more pollutants on the highway than permissible limits. The vehicles covered under the proposed recall are of model years 2009 to 2015.

The engines of the affected vehicles are manufactured by Audi and distributed to Porsche and Volkswagen. Audi Q7 and Volkswagen Touareg SUVs of model years 2009 to 2016, and the Porsche Cayenne of model years 2013 to 2016 feature this software. Other vehicles having this software include Audi A6, A7, A8 and Q5s of model years 2014 to 2016. Volkswagen needs to submit the recall plan of the affected vehicles within 45 business days.

Earlier the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board found that around 85,000 vehicles with 3-liter, six-cylinder engines of model year 2009 are equipped with the emissions cheating software.

Recently, South Korea levied a fine of 14.1 billion won ($12.31 million) on Volkswagen and issued a notice, ordering the company to recall 125,522 vehicles. The automaker needs to submit a recall plan by Jan 6, 2016.

Volkswagen has been much in the news after the EPA revealed that it had developed a software algorithm to deceive U.S emission tests. The company admitted that its diesel vehicles are installed with software which makes the engines appear to have low emission levels during tests. According to the EPA, Volkswagen vehicles emit nitrogen oxides, or NOx, at almost 40 times the standard amount. Nitrogen oxide emissions lead to smog, acid rain as well as serious health concerns like lung cancer.

Almost 11 million vehicles around the world are fitted with this software. Out of the total, 5 million vehicles have been manufactured under the Volkswagen brand and 2.1 million under the Audi brand.

Zacks Rank

Volkswagen currently carries a Zacks Rank #3 (Hold). Better-ranked automobile stocks include General Motors Company GM , Fox Factory Holding Corp FOXF and O'Reilly Automotive Inc. ORLY . All these stocks carry a Zacks Rank #2 (Buy).

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O REILLY AUTO (ORLY): Free Stock Analysis Report

GENERAL MOTORS (GM): Free Stock Analysis Report

VOLKSWAGEN-ADR (VLKAY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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