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Volkswagen Software Scam: Dutch Dealers Halt Sale

Volkswagen AG 's VLKAY Dutch dealers have stopped selling diesel vehicles with the Euro 5, EA 189 motor following the software scandal. Pon - a Dutch importer of Volkswagens, Audis, SEATs and Skodas - recently stated that it expects this sales halt to affect 4,100 vehicles in its stock.

Volkswagen has been much in the news after the Environmental Protection Agency (EPA) revealed that the company had developed a software algorithm to deceive U.S emission tests. Volkswagen has 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. Although these cars do not pose safety risks, public health is at stake.

Almost 11 million vehicles around the world - including Jetta, Beetle, Audi A3 and Golf from model years 2009-2015 and Passat of model years 2014 and 2015 - 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. The engines were built into 1.6-liter and 2-liter turbo diesel models in the Audi A1, A3, A4, A6, TT, Q3 and Q5 ranges. Audi confirmed that the vehicles with the new Euro 6 engines do not have the software installed.

Skoda Auto - a wholly owned subsidiary of the Volkswagen - also revealed that 1.2 million of its vehicles feature engines which manipulated the emission data. Skoda Auto further stated that Volkswagen will be recalling the vehicles in question to fix the problem.

Volkswagen will have to face serious consequences for this software scandal. The company may face a fine of $37,500 per vehicle for the violation. The automaker will also have to fix the problem free of cost as soon as it develops a solution. Meanwhile, Volkswagen expects a $7.3 billion charge for the fraud which has severely tarnished its reputation, clearly reflected by its declining share price. Meanwhile, the company has stopped the production of 2015 and 2016 Volkswagen and Audi models with the four-cylinder turbo diesel engine.

In addition, the German prosecutors have started investigating against former Volkswagen CEO, Martin Winterkorn. Through the investigation, they aim to detect the executive responsible for this scandal.

Volkswagen currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry include Nissan Motor Co. Ltd. NSANY , Daimler AG DDAIF and Superior Industries International, Inc. SUP . All these stocks sport a Zacks Rank #1 (Strong Buy).

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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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