‘Dieselgate’ sent shockwaves through the car industry, as one of the world’s biggest car manufacturers was found guilty of cheating emissions tests. As a result of the scandal, the Volkswagen net worth plummeted.
Volkswagen has regained some of its lost trust and value over the last few years. Yet, the company is far from what it once was. They may have reclaimed their place as the world’s most popular car maker. However, they are still a long way from returning to their peak market cap of €160 billion.
Their decline is the result of the Volkswagen emissions scandal, otherwise known as ‘Dieselgate’, which saw stock prices sink by 23% in the 24 hours after the news broke.
What is the Volkswagen emissions scandal?
Emission standards are in place around the world to limit the amount of pollution caused by vehicles. Increasingly stricter standards have forced car production costs up. In order to cut costs, Volkswagen attempted to cheat the system.
They programmed their engines to alter results when under test conditions. As a result, up to one million extra tonnes of harmful gasses have been pumped into the air each year.
Their lies were uncovered by discrepancies in emissions reported in the United States and Europe. An investigation found that emissions were up to 40 times the permitted level.
The initial scandal involved approximately half a million American cars. However, VW have since admitted that up to 11 million vehicles worldwide had the emissions cheating software installed.
As a result, the company had to set aside €18.2 billion to pay for the damage caused. This would cover the cost of recalling vehicles and replacing parts, as well as pay off the various fines handed out over the scandal.
Has the Volkswagen net worth recovered?
Around the time of the scandal, Volkswagen’s share price fell from a high of €253.20 to a low of just €92.40. The company lost more than 50% of its value in just three days following the news.
Vehicle sales have since recovered and Volkswagen net worth has been climbing since then.
Yet, it is still far from what it once was. It is unlikely that the money lost to the scandal will ever be recouped. Yet, with a market cap of €69.62 billion, VW are fighting on.