$16.9b wiped off VW's market value

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A Volkswagen Jetta TDI diesel engine at the Los Angeles Auto Show. - AP

Berlin - By early afternoon trading in Frankfurt, Volkswagen's share price was down a stunning 19.4 per cent at near three-year low of ?130.20.

By AP

Published: Tue 22 Sep 2015, 12:00 AM

Last updated: Tue 22 Sep 2015, 2:00 AM

Around ?15 billion ($16.9 billion) was wiped off the market value of Volkswagen on Monday following revelations that the German carmaker rigged US emissions tests for about 500,000 diesel cars.
By early afternoon trading in Frankfurt, Volkswagen's share price was down a stunning 19.4 per cent at near three-year low of ?130.20. Its dramatic fall weighed heavily on Germany's main stock index, the DAX, which underperformed its peers in Europe with a 0.6 per cent decline.
Volkswagen's market woes on Monday followed a weekend that saw the company's reputation for probity seriously damaged by revelations from the Environmental Protection Agency, or EPA, in the US that it had skirted clean air rules. All told, the EPA indicated that VW faces fines that could run up to more than $18 billion.
The EPA said Volkswagen used a device programmed to detect when the cars are undergoing official emissions testing. The software device then turns off the emissions controls during normal driving situations, allowing the cars to emit more than the legal limit of pollutants. Volkswagen marketed the diesel-powered cars, which account for about 25 per cent of sales, as being better for the environment. The cars include the Audi A3, Jetta, Beetle, Golf and Passat models.
"The company will have to recall nearly 500,000 affected cars, which will cost it millions of dollars, and that's even before the damage to its brand and potential fines," said Michael Hewson, chief market analyst at CMC Markets.
The agency has ordered Volkswagen to fix the cars at its own expense but said car owners do not need to take any immediate action.