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Zacks Industry Outlook Highlights: Volkswagen, Toyota Motor, General Motors, BMW and Daimler

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Chicago, IL - September 30, 2015 - Today, Zacks Equity Research discusses the Autos (Part 1), including Volkswagen AG ( VLKAY ), Toyota Motor Corp. ( TM ), General Motors Company ( GM ), BMW AG ( BAMXF ) and Daimler AG ( DDAIF ).

Industry: Autos (Part 1)

Link: http://www.zacks.com/commentary/57773/auto-industry-stock-outlook---sept-2015

Impact of the Volkswagen Scandal

The recent Volkswagen AG ( VLKAY ) scandal is expected to have a significant impact on the auto sector in the near to mid term. The German automaker has been found cheating on U.S. emission tests using software that activates emission control systems in its diesel vehicles during tests. These controls are, however, automatically turned off during normal driving. Many other countries have also started investigating whether Volkswagen uses similar tactics to deceive their respective emission tests.

Apart from the massive recall-related expenses to be incurred, the scandal is also a black eye for the Volkswagen brand that will have a bearing on its sales efforts for a long time. A part of the decline will result from the automaker's decision to halt the sales of its diesel vehicles in some markets. But the sales challenge is unlikely to stay restricted to the company's diesel vehicles only -- it will have a bearing non-diesel vehicle sales all over the world.

This will position Toyota Motor Corp. ( TM ) as the leading contender for the position of the highest selling automaker globally in 2015. Although Toyota had held this position over the last three years, it had lost out to Volkswagen in the first half of 2015 and the race for the full year was expected to be a close one. Now the path seems clear for Toyota to take the lead, while General Motors Company ( GM ) will likely hold the second position if Volkswagen sales are hit hard.

Another fallout of the Volkswagen scandal will be increased regulatory scrutiny for all automakers. Already, other German automakers are beginning to feel the heat. Both BMW AG ( BAMXF ) and Daimler AG ( DDAIF ) have been forced to issue public statements clarifying that they do not manipulate emission tests following reports of higher-than-permitted emissions from their vehicles.

Meanwhile, the auto sector is facing other major concerns such as falling sales in the largest auto market, China, and increasing safety recalls.

However, there are several positive developments to offset these headwinds. Strong sales in the U.S. and Europe are pulling up global sales volumes. The low oil and gas prices are also benefiting the industry by boosting sales, particularly of larger vehicles that carry a wider profit margin.

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VOLKSWAGEN-ADR (VLKAY): Free Stock Analysis Report

TOYOTA MOTOR CP (TM): Free Stock Analysis Report

GENERAL MOTORS (GM): Free Stock Analysis Report

BMW AG (BAMXF): Free Stock Analysis Report

DAIMLER AG (DDAIF): 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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