Today might be the day to invest in VW Group. Last night, following further fallout from the discovery of false emissions data, its share price has plummeted further – now 30% down on last Friday’s close.

The rest of this week is looking tough as well, and it seems the CEO of VW Group, Martin Winterkorn, will be very lucky to survive in his role. It’s not just damage to VW’s reputation that is the problem. To deal with the fallout from the crisis, the accounts team has had to move 6.8 billion euros off it’s books to cover predicted expenses.

 

 

That blows a hole in the quarterly profit forecast that you don’t need a high-tech lab to diagnose.

For those late to this one, VW Group has been found guilty of falsifying the emmissions data for over 11 million vehicles. To be issues with authorised figures for engine emissions, vehicles are tested in a controlled environment within a US government lab. While it is well known that car companies ‘game’ the system by designing engines that produce desirable outcomes for the test, VW has taken this a step or two further.

 

The engines in question – all diesel – have software designed to alter the performance of the engine when the on-board computer recognises a diagnostic is being performed. There is no way that these results can be replicated in everyday conditions, and independent tests have proved that the engines create emissions many times higher than those reported in official testing.

 

 

With a huge portfolio – including Porsche and Audi – it’s hard to see this share price lasting too long. While this crisis has certainly damaged the reputation of VW Group, the company maintains a strong history of reliability and value that will enable it to survive the rocky road upon which it now finds itself.

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(This article does not constitute financial advice. Please consult an industry expert prior to any investment decisions)