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  1. Home
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Volkswagen Errors on Emissions Testing Are a Bad Case of Déjà Vu

Emissions are leaving a foul smell in the air around Volkswagen.
By KEVIN CURRAN Dec 05, 2018 | 12:19 PM EST
Stocks quotes in this article: VLKAF, FUJHY, NSANY

Volkswagen AG (VLKAF) is finding a familiar fault with its emissions testing on Wednesday.

While the stock market is closed in the United States, there is still a great deal of news coming from abroad. In this case, it is bad news regarding Volkswagen's reports on emissions for its Japanese arm.

The Germany car giant admitted at a press conference on Dec. 5 that the company had made a number of errors in its emissions testing, with some errors recorded as recently as June.

According to the carmaker, there were 83 cases in which exhaust emissions and fuel economy data were misreported or improperly reported from 2012 to June 2018. The number of vehicles found to have been improperly passed along represented about 7.5% of the vehicles examined.

While not an alarmingly large number, it still represents another concerning piece of information on governance for the company that was caught tampering with emissions results only a few short years ago in its infamous "Dieselgate" scandal.

Till Scheer, president and CEO of Volkswagen Group Japan, made clear that this emissions issue was not deliberate, delineating the problem from the notable case in 2015 and from competitors.

Don't Get Too Revved Up

Volkswagen is not unique to this issue and it may actually be the least guilty in the strict Japanese market, alleviating some of the pressure directed at the company.

In fact, both Subaru (FUJHY) and the recent headline-grabber Nissan (NSANY) admitted to faulty fuel economy and emissions tests earlier this year. In both cases, deliberate tampering took place over several years.

Adding some mitigation to the most recent news is the company's lack of reliance on the Japanese and East Asian markets.

According to FactSet data, the company receives the bulk of its revenue from Germany, the United States, and the United Kingdom. The only East Asian nation to factor in more than 4% of total revenues is mainland China, coming in as the seventh most profitable region for the automaker.

While it may be a familiar problem that has stung the car company in the past, the issue could end up being a tempest in a teapot.

The lack of malice in the report, the worse actions of competitors on the same issue, and the more impactful news on trade coming from much more important markets in the United States and China make the emissions testing issues likely not material to movement once the market opens again.

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TAGS: Investing | Stocks | World | Automobile Components | Automotive | Energy | Stock of the Day

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