How the mighty have fallen. 

Just a few weeks after being declared the largest car manufacturer in the world, Volkswagen (VLKAY) was hit with a scandal of epic proportions that threatens to chew away its market share and bank balance in record time. 

Being caught up in an emissions crisis has plunged the stock (ETR:VOW3) in Germany by over 45% so far this year.  Millions of cars in several countries are being recalled and suppliers around the world are wary of the impending costs the company is likely to suffer battling this issue. 

Increased costs mean fewer investments, and that could be very bad news for the suppliers that rely on the company. As the concerns over whether the German automaker will survive continue to mount, there are growing tensions for investors in suppliers such as Perceptron, BorgWarner and Tower International. All three have seen their share prices drop and there is even more uncertainty now that VW has confirmed that investments will be cut back. 

The effects on US car parts suppliers is easy to see, but some are denying that there will be much fallout from this crisis. Diesel component maker Tenneco, for example, said that there will be heightened scrutiny of vehicles coming into the country, but that the company won’t be affected much. 

In fact, the company’s CEO, Gregg Sherrill, said that the increase in scrutiny will boost demand for even more components that will be needed to meet the new requirement. The company maintains that the product plan for the next several years won’t be changed much at all. These comments by the CEO helped the stock rise 12% to $54.20 last month. 

BorgWarner also saw its stock rise by 2.7% as the company manufactures similar emissions components. Both companies rely 8% and 17% respectively on Volkswagen for revenues. 

Another supplier, Dana Corp, saw its net income rise from $90 million to $119 million. Revenues did decline by $136 million, but only because of currency issues and failing operations in Venezuela. Dana expects the rise in truck demand in Europe and North America to offset any negative impact from the VW fallout.