<p> The recent controversies surrounding Volkswagen (VW) may have wiped out a whopping €22.3 billion of the company’s enterprise value (EV), according to a report by Goldman Sachs.<br /><br /></p>.<p>“VW’s share price decline through the period September 18-October 15, from €162.4 to €102.8 has removed €22.3 billion of market value from VW’s EV,” Goldman Sachs said in the report.<br /><br />VW’s ‘Dieselgate’ controversy arose on September 18 with the Environmental Protection Agency (EPA) publicly delivering a violation notice to VW and requiring the firm to publicly admit to designing and installing software designed to cheat emissions tests in some 11 million vehicles. <br /><br />The episode has seen VW’s pref shares fall 37 per cent, triggered the resignation of the CEO and the suspension of three brand R&D heads, and seen the company explaining itself to governments and regulators. It has also raised global scrutiny on vehicle emissions, according to the report.<br /><br />The report goes on to state that products recalls and repairs for the company could lead to fixed costs of around €5.5 billion.<br /><br />“Outside the US, vehicles require similar fixes to those inside the US, under recall, but in greater numbers (10.4 mn units), leading to a greater estimated fixed cost of €5.5 billion (assuming same per-car fix cost),” Goldman Sachs said.<br /><br />Customers whose cars are fixed under recall, but which suffer a fuel-efficiency penalty as a result, may be able to claim compensation. <br /><br />Assuming a total useful life of 120,000 miles per car, each one per cent miles per gallon (mpg) difference translates to a headwind of €1.6 billion, Goldman Sachs added.<br /><br />‘Costly’ scandal<br /><br />Volkswagen share price declines through the period September 18-October 15<br /><br />Goldman Sachs report says product recalls and repairs could lead to fixed costs of €5.5 billion<br /><br />Dieselgate controversy has raised global scrutiny on vehicle emissions<br /><br /></p>
<p> The recent controversies surrounding Volkswagen (VW) may have wiped out a whopping €22.3 billion of the company’s enterprise value (EV), according to a report by Goldman Sachs.<br /><br /></p>.<p>“VW’s share price decline through the period September 18-October 15, from €162.4 to €102.8 has removed €22.3 billion of market value from VW’s EV,” Goldman Sachs said in the report.<br /><br />VW’s ‘Dieselgate’ controversy arose on September 18 with the Environmental Protection Agency (EPA) publicly delivering a violation notice to VW and requiring the firm to publicly admit to designing and installing software designed to cheat emissions tests in some 11 million vehicles. <br /><br />The episode has seen VW’s pref shares fall 37 per cent, triggered the resignation of the CEO and the suspension of three brand R&D heads, and seen the company explaining itself to governments and regulators. It has also raised global scrutiny on vehicle emissions, according to the report.<br /><br />The report goes on to state that products recalls and repairs for the company could lead to fixed costs of around €5.5 billion.<br /><br />“Outside the US, vehicles require similar fixes to those inside the US, under recall, but in greater numbers (10.4 mn units), leading to a greater estimated fixed cost of €5.5 billion (assuming same per-car fix cost),” Goldman Sachs said.<br /><br />Customers whose cars are fixed under recall, but which suffer a fuel-efficiency penalty as a result, may be able to claim compensation. <br /><br />Assuming a total useful life of 120,000 miles per car, each one per cent miles per gallon (mpg) difference translates to a headwind of €1.6 billion, Goldman Sachs added.<br /><br />‘Costly’ scandal<br /><br />Volkswagen share price declines through the period September 18-October 15<br /><br />Goldman Sachs report says product recalls and repairs could lead to fixed costs of €5.5 billion<br /><br />Dieselgate controversy has raised global scrutiny on vehicle emissions<br /><br /></p>
