Volkswagen’s stock (VLKAY) price dropped almost 30 percent between Monday and Tuesday after reports came out that they had cheated on U.S. emissions tests.
As reported by Pensions & Investments , Volkswagen (VW) admitted to manipulating the results of some of the tests for their diesel cars. When the discovery — made by the Evironmental Protection Agency and California Air Resource Board — was made public, the VW stock took a 16.5 percent hit on Monday — the VW stock dropped another 15.4 percent on Tuesday. As of this writing, the VW stock recovered just slightly today, at a price of $27.25.
Prior to news of this scandal, VW was considered a very reputable company. The drop in their stock price reflects the damage done to that reputation. VW stock is still part of the Dow Jones Sustainability World index, as well as the Dow Jones Sustainability Europe index.
A further development related to the story pertains less to the VW stock price and more to Volkswagen CEO Martin Winterkorn.
After releasing a statement on Sunday addressing the scandal, in which he apologized and advised that VW would submit to whatever the appropriate agencies decide, it has been announced that the VW CEO will step down.
As reported by the Detroit News , Winterkorn announced his resignation. When a scandal unfolds and the stock takes a hit like VW’s has, there is often a significant change in personnel. Winterkorn admitted as much in his announcement, saying that “Volkswagen needs a fresh start.”
As the lawsuits began flooding in by investors after the VW stock drop, the German car manufacturer lawyered up. Following in the footsteps of corporate giants BP and General Motors, VW will be represented by Kirland & Ellis in the United States.
As of Tuesday, it looked as if Winterkorn wouldn’t step down, even though the VW stock had already tanked .
The drop in VW stock isn’t the only thing Volkswagen has to worry about. VW has been big on their “clean diesel” vehicles and have been lobbying to have these cars measured against the same regulations as hybrids in the United States. Regardless of whether or not their arguments are justifiable, their word will inherently be questioned from here on out, especially by the regulators they have already been caught lying to.
VW stock has not been this low since September of 2010. In early February of 2010, the VW stock was at it’s all-time lowest, $15.13.
[Image credit Sean Gallup / Getty Images]
