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Volkswagen (VLKAY) to Offer 10 New SUVs in China by 2020

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Volkswagen AGVLKAY is planning to expand its product portfolio in China with the addition of 10 new SUVs by 2020 as it revealed at an event before the Guangzhou Auto Show. The company plans to produce these SUVs in China.

China is Volkswagen's largest market by volume. However, the automaker believed that it was lagging in the budget SUV and minivan segments. As SUVs make up the fastest growing vehicle segment in China, Volkswagen decided to augment its offering in this segment.

The company will also add 15 new energy vehicles in China over the next 3 to 5 years. All these vehicles will be produced locally. Further, Volkswagen will employ 30,000 workers in China by 2019.

Volkswagen has been facing a tough time after the Environmental Protection Agency (EPA) revealed that the company 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 - 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 company may incur a cost of 6.7 billion euros ($7.4 billion) for recalling these vehicles.

Volkswagen currently carries a Zacks Rank #5 (Strong Sell). Better-ranked automobile stocks include General Motors Co. GM , O'Reilly Automotive Inc. ORLY and Fox Factory Holding Corp FOXF , each carrying 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

FOX FACTORY HLD (FOXF): 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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