Volkswagen US Official Convicted In Emissions Scam

Volkswagen ADR (VLKAY). Volkswagen is the largest automobile manufacturer in Europe. Their activities focus on the automotive market and they offer products and services along the entire automotive value chain. With nine independent brands, they are able to offer a unique range of models from the extremely efficient 3-litre car to the great sporting tradition of Bentley. While each of the brands has a distinct personality, it also benefits from its membership of the Volkswagen Group with its global manufacturing base

Volkswagen has recovered nicely–in share price terms–from their horrible emissions scandal. To recap, the company was caught installing defeat devices in its popular diesel vehicles in the US and elsewhere. The cars, sold as a “green” alternative to traditional gasoline vehicles which had the added bonus of running on cheaper diesel-based fuels, turned into a nightmare for the company and owners once savvy university researchers noticed that their emissions figures came nowhere near those claimed by the company.

However, the fallout from this case continues. This week, high-ranking US Volkswagen executive Otto Schmidt, a German citizen and the general manager of Volkswagen’s engineering and environmental office, was sentenced to seven years in prison and fined $400k for violating the Clean Air Act and for participating in a conspiracy to defraud the federal government of the United States.

Schmidt may end up being the fall guy here, because Germany will not extradite other officials to face justice. The US only caught him because he was dumb enough to fly to Miami for a family vacation. He was key in the scam however, as he lied to US officials once they became suspicious an began investigating the defeat devices. So far, only one other employee has faced justice–and that person was a lower-ranking engineer.

Despite the bad press, the fines, the costly recalls, and all the rest, VW has rebounded nicely since this scandal. We had a SELL or STRNG SELL on the company for a while, but, as of now our models currently rate the company a BUY.

ValuEngine continues its BUY recommendation on Volkswagen ADR for 2017-12-06. Based on the information we have gathered and our resulting research, we feel that Volkswagen ADR has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE Company Size and P/E Ratio.