Business Community Reacts to Volkswagen Problems
Here’s a look at the growing scandal through the eyes of the business community.
The state of Tennessee in January came up with almost 170-million dollars in incentives to encourage Volkswagen to build its new Cross Blue SUV at the Chattanooga factory.
The plant has expanded, plans have been made to hire up to 2000 more workers and production is scheduled to start next year.
But for now the company has ordered dealers to stop selling 5 diesel models including the Passat.
That follows an announcement from the EPA that V-W cheated emissions test with a built-in defeat switch that showed less emissions when the vehicle was undergoing tests.
What is wall street saying about that?
CHRIS HOPKINS,V.P. BARNETT & COMPANY "Today was the first day the stock had a chance to really react ..and it reacted very negatively…selling off about 20% and that amounts to roughly 15-16 billion dollars…in market capital."
Its a black eye for the automaker, a shock to the market, but it may also affect individuals.
CHRIS HOPKINS "Undoubtedly a lot of mutual funds that all of us own in our retirement plans…anybody who has international exposure no doubt owns stock in the world’s largest car company."
Hopkins says if Volkswagen reacts quickly and corrects the problem, the issue will likely go away as did the General Motors ignition switch issue. But he says it may keep VW from getting as large a share of the U.S. market.
Hopkins expects some finger-pointing at the German headquarters.
CHRIS HOPKINS "Speculation is who pays the price..in terms of management at Volkswagen ..the suspicion is there’ll be some shake-ups in the management world…probably the CEO if I had to guess."
State lawmakers we contacted did not respond to our request for comment.
About 500-thousand Volkswagen and Audi diesel are affected.
Owners are being told to continue driving them until they hear from the company.
They are not in violation of any law.
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