# Buy Volkswagen or not?



## CB1021 (Mar 28, 2011)

Hi guys,

Volkswagen getting hit - crashed about 33% during the last 3 days. Anybody have a comment regarding how much of that decrease is associated with the fines expected versus how much is associated with the expected decrease in sales? Potentially over-reaction on the decrease sales/brand equity part?

Thanks


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## jargey3000 (Jan 25, 2011)

ja! I'm vonderink da same tink!


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## supperfly17 (Apr 18, 2012)

CB1021 said:


> Hi guys,
> 
> Volkswagen getting hit - crashed about 33% during the last 3 days. Anybody have a comment regarding how much of that decrease is associated with the fines expected versus how much is associated with the expected decrease in sales? Potentially over-reaction on the decrease sales/brand equity part?
> 
> Thanks


Yess buy buy buy.


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## DollaWine (Aug 4, 2015)

I was wondering the same thing (not that I would buy it anyway). I'm sure a bounce back is inevitable, this will not destroy their entire company.


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## wendi1 (Oct 2, 2013)

I would wait. There's going to be a world of hurt before any bounce-back, IMHO.


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## jargey3000 (Jan 25, 2011)

also, is anyone else outraged, outraged! that a car company, a car company! would cheat like that????


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## HaroldCrump (Jun 10, 2009)

jargey3000 said:


> also, is anyone else outraged, outraged! that a car company, a car company! would cheat like that????


Why would a car company be uniquely ethical?


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## jargey3000 (Jan 25, 2011)

(I was trying to sound sarcastic....)


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## Value (Jul 31, 2015)

I think it's probably a good idea to wait it out for a bit.
There will be transformation in the board, change of CEO, etc etc.
Wait till the situation improves a little.


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## Value (Jul 31, 2015)

Oh and at least THEY know how to build reliable cars... So in the long run, it's a great opportunity.

Unlike other POS's out there... Cough Ord Cough Hevy... Cough Cough


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## none (Jan 15, 2013)

I wouldn't touch this. If I owned a a VW diesel I think it would be completely reasonable to ask for a full refund for the car I bought b/c I didn't receive the car that I paid for. Refunding 11 million cars plus 18 billion in fines is a potentially company destroying event.


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## steve41 (Apr 18, 2009)

Since 2009!!? How on earth could a secret like that be kept for so long?


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## PuckiTwo (Oct 26, 2011)

I would definitely wait. There will be more finger pointing, who knew what, who else is involved outside the car industry, and what not... Not long ago, only a very few months back there was a big internal upheaval in the "upperest" ranges of VW. The head of the controlling board Piech (grandson of Porsche founder and owning 10% in Porsche) against CEO Winterkorn. http://www.spiegel.de/international...e-power-struggle-at-volkswagen-a-1032210.html.This goes into family feuds between Porsche family members, etc. It goes on for ages. Piech lost at that time (May 2015) that battle and left as chairman and Winterkorn as CEO stayed. One question is, did Winterkorn know? Did Piech know? And if not, why did it not come up to them. It is assumed that there will not only an external but also an internal battle. 
More interesting would be to see where the other car manufacturers stand.


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## supperfly17 (Apr 18, 2012)

Value said:


> Oh and at least THEY know how to build reliable cars... So in the long run, it's a great opportunity.
> 
> Unlike other POS's out there... Cough Ord Cough Hevy... Cough Cough


Not sure where you are getting this info but vw/audi are one of the least reliable vehicles out there. They used to be reliable until the 90s.


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## doctrine (Sep 30, 2011)

Look at BP: still 50% below the pre-disaster peak. Why hurry? It took over 2 months to bottom out and isn't really that much higher than even that absolute bottom.


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## janus10 (Nov 7, 2013)

Definitely wait. Even Toyota took over a year after their brake issue and they rose but not as fast as the overall market.

This could destroy the company though as bad as this is it isn't Toyota, GM or the airbag supplier where people actually died.

Hyundai and Kia will benefit in South Korea as VW is a major supplier there.

I feel empathy for VW factory workers, Admin and dealers. They will suffer even though they are innocent.


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## wendi1 (Oct 2, 2013)

Well, we don't know if people actually died. They might have. If you sell salmonella-contaminated in peanut butter, and people die after eating it, we can say you directly killed them. 

If someone with existing heart or lung disease dies early because of air pollution, and your engines were a small part of the air pollution, it is harder to prove.


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## 0xCC (Jan 5, 2012)

And now the CEO has resigned... I am a little bit surprised how quickly that happened. I haven't been following all the details but it seems strange to me that if the CEO didn't either directly sign off on the plan to skirt the emissions testing or come up with the plan himself that he would resign before heading up a full investigation.

The quick resignation leads me to believe that he knew exactly what was happening over the last 6-7 years or so and there is a paper trail that shows that he knew about it and approved it.

Edit: I am now reading that the CEO had a contract that expires on Friday and there is a board meeting on Friday that would have decided whether to extend that contract or not. It seems unlikely that the contract would have been extended so it makes a little more sense that he resigned as quickly as he did.


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## HaroldCrump (Jun 10, 2009)

Of course the CEO knew.
In matters like these, usually entire management food chain knows.


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## fatcat (Nov 11, 2009)

jargey3000 said:


> also, is anyone else outraged, outraged! that a car company, a car company! would cheat like that????


ford famously calculated that it would cost them more to fix a defective gasoline tank that it would to pay damages to victims of crashes many of who were burned alive



> The National Highway Traffic Safety Administration investigated complaints about the Pinto's fuel tank safety as early as 1974, taking action in 1977 — after an article in Mother Jones. The article said that Ford was aware of the design flaw, was unwilling to pay for a redesign, and decided it would be cheaper to pay off possible lawsuits. The magazine obtained a cost-benefit analysis that it said Ford had used to compare the cost of repairs (Ford estimated the cost to be $11 per car) against the cost of settlements for deaths, injuries, and vehicle burnouts . The document became known as the Ford Pinto Memo.[18][14][19][17]


there all kinds of examples of car companies behaving very, very badly


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## jargey3000 (Jan 25, 2011)

for pete's sake. i was trying to be sarcastic! sheesh!


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## Sampson (Apr 3, 2009)

Time for Porsche to buy this puppy with cash...


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## besmartrich (Jan 11, 2015)

I would definitely wait until bottom shows itself. It is going to take a while to get the huge disaster like this digested.


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## GreenAvenue (Dec 28, 2011)

Buy. Volkswagen is never going to go away first of all and they have the resources to get over this. This emissions thing is also going to show up with other brands as well and VW will no longer be the underdog. People also don't care as much about these emissions than they do about safety related parts as brakes or seatbelts. Last, Angela Merkel will never let her proud company go down.


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## sags (May 15, 2010)

BMW is now in the spotlight as well. All the German manufacturers are going to be tested, as it appears a widespread practice.


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## Pluto (Sep 12, 2013)

Templeton would probably be a buyer. He liked disaster stocks as the stock price usually was an over reaction. But he didn't know where the bottom was so he averaged in the buying. He bought on the way down, at the bottom, and on the way up.


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## 0xCC (Jan 5, 2012)

Sampson said:


> Time for Porsche to buy this puppy with cash...


You might want to look a little more closely at Volkswagen Auto Group's corporate structure:

http://www.volkswagenag.com/content/vwcorp/content/en/brands_and_products.html


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## RBull (Jan 20, 2013)

Sampson said:


> Time for Porsche to buy this puppy with cash...


Huh?
VW has owned a share of Porsche for years. Since 2012 they own 100% of Porsche, as well as numerous other makes.

Sorry, didn't see your post above oxCC


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## fatcat (Nov 11, 2009)

class action lawsuits up the wazoo to appear shortly on this one


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## GoldStone (Mar 6, 2011)

GreenAvenue said:


> Buy. Volkswagen is never going to go away first of all and they have the resources to get over this.


I agree that VW is never going to go away. But like GM, it may need to go through bankruptcy.

I'm not saying it will go BK for sure, but it's definitely a possibility.


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## Just a Guy (Mar 27, 2012)

fatcat said:


> class action lawsuits up the wazoo to appear shortly on this one


Already been one filed. $1 billion to start.


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## Sampson (Apr 3, 2009)

0xCC said:


> You might want to look a little more closely at Volkswagen Auto Group's corporate structure:
> 
> http://www.volkswagenag.com/content/vwcorp/content/en/brands_and_products.html


You might want to look at the ownership of voting rights in the Volkswagen group...
https://en.wikipedia.org/wiki/Volkswagen_Group#Ownership

This was one of the biggest stories during the great depression, a company with so much cash on hand that it could gobble up a behemoth auto group...

Maybe I read it wrong?


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## GoldStone (Mar 6, 2011)

Sampson said:


> You might want to look at the ownership of voting rights in the Volkswagen group...
> https://en.wikipedia.org/wiki/Volkswagen_Group#Ownership
> 
> This was one of the biggest stories during the great depression, a company with so much cash on hand that it could gobble up a behemoth auto group...
> ...


Yeah. Porsche SE is a holding company. It owns 50.7% voting rights in VW.

VW owns 100% of Porsche AG, the auto manufacturing company.


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## Sampson (Apr 3, 2009)

The manufacturing company had to be folded in as part of the restructuring...

doesn't really matter about marques when the ownership is the ownership, who approves the decisions? VW was a cash cow, it probably will be again in a few years, so why not own it outright?

edited to add: when people think of BRK, do they really consider subsidiaries? or just the ownership.

Its all semantics anyway, since VW and Porsche have always been intricately linked, and in the end, the family are the ones who are rich.


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## none (Jan 15, 2013)

INteresting article in nytimes:

http://www.nytimes.com/2015/09/25/b...n-region&region=top-news&WT.nav=top-news&_r=0

I wouldn't be surprised if VW gets sued into oblivion. Americans tend to protect their own white collar criminals but are usually willing to go after foreigners.


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## sags (May 15, 2010)

Don't worry about the CEO who stepped down.

He will receive a guaranteed $32 million dollar pension and could receive $20 million in severance pay.

He earned about $10 million a year as the CEO, including "performance bonuses".

http://www.bloomberg.com/news/artic...ikely-to-get-32-million-pension-after-leaving


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## 0xCC (Jan 5, 2012)

Sampson said:


> Time for Porsche to buy this puppy with cash...





Sampson said:


> You might want to look at the ownership of voting rights in the Volkswagen group...
> https://en.wikipedia.org/wiki/Volkswagen_Group#Ownership
> 
> This was one of the biggest stories during the great depression, a company with so much cash on hand that it could gobble up a behemoth auto group...
> ...


I wasn't aware that there was actually a Porsche holding company that held that much control of Volkswagen. So let's look into this a little bit...

Porsche SE (the holding company) has as of their December 2014 annual report 2.2 billion Euros in cash on their balance sheet. I couldn't find a more recent balance sheet for them that was more recent than that. Porche SE owns about a third of Volkswagen Auto Group already (but just under 51% of the voting rights). The current market cap of Volkswagen Auto Group is approximately 33.7 billion Euros (295 million shares trading at around 114.40 Euros). So taking away the third that Porsche SE already owns that leaves around 22 billion Porsche SE would need to buy the rest of the company.

Am I missing anything there?


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## none (Jan 15, 2013)

Company founded by Nazis risks damage to reputation:

http://www.thedailymash.co.uk/news/...zis-risks-damage-to-reputation-20150924102249

"24-09-15
Germany Volkswagen

A CAR company founded by Nazis in 1937 is facing a public relations disaster.

Volkswagen, the brainchild of National Socialist minister Robert Ley, has been accused of falsifying emissions data, which experts warn could damage their unblemished record.

Historian Donna Sheridan said: “Companies can deal with all sorts of setbacks, from corruption scandals, to product recalls, to being founded by people who were indicted for war crimes at Nuremberg.

“But massaging their emissions testing to give a minor boost to their green credentials? Game over.”

Car expert Tom Booker added: “There’s a danger that when people hear the name ‘Volkswagen’, their first thought will be ‘cheats’. Shareholders will be desperate to turn the clock back to a time when ‘Volkswagen’ meant nothing more than Aryan racial supremacy.”

A Volkswagen spokesman said: “*Everyone knows that if Hitler were alive today, he’d be driving a BMW.*”


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## slinger (Apr 10, 2015)

I would definitely wait this one out. This stock is extremely volatile right now and there could be further significant downside short term.


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## HaroldCrump (Jun 10, 2009)

+1 on waiting or altogether forgetting about it.
Chances are everyone from top to bottom was involved.
It is being compared to Enron.

Too early to know whether this will blow over (i.e. "deferred prosecution" with $18B fine) like BP oil spill, LIBOR rigging etc. or whether this will be an Enron-like event.

As far as Germany is concerned, VW is TBTF, so we shall see how this turns out.

I am happy to watch from the sidelines - if I wanted risk at this point in the market cycle, there are enough avenues out there to buy risk.

In any case, the dividend taxation on the VW ADR would be complex to say the least.
Even with a 4.50% yield (at this time), the complexity may not be worth it.
Plus, the yield could get cut, depending on the fine/lawsuit settlement amounts.


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## carverman (Nov 8, 2010)

none said:


> Company founded by Nazis risks damage to reputation:
> 
> A CAR company founded by Nazis in 1937 is facing a public relations disaster.
> 
> A Volkswagen spokesman said: “*Everyone knows that if Hitler were alive today, he’d be driving a BMW.*”


Hmmm.. even if he were alive today, highly unlikely he would be able to drive anything at age 126. He was born in 1889 and died in 1945 at age 56.

He did not drive himself but was chauferred around by his driver (Erich Kempka of the Nazi SS, ( member of the SS Escort Command of the Führer) 
in a Mercedes specially built car (one of 3) 
a *Grosser Mercedes 770 W 150 of which Daimler Benz of Stuttgart produced three versions between 1938 and 1943. *

More German propoganda. Any one seen their Canadian commercials with that fake "quality control actor in a white lab coat and his female assistant with the slicked down
hair? Very funny and very typical of the way they think..with their monocle glasses perched on their noses, scoffing at everyone else that their quality is above all else..the best...
wrong! They cheat just like some of the other car markers when it comes to trying to meet emission standards and bean counting on safety and reliability.

Why do those Germans think he would favour the "Hitlervagen/ KdF Kraft durch Freude (Strength through Joy) car anyway? 

He only created it to give the German worker labour movement something to donate some of their hard earned Reichmarks, in 1938 the hopes that eventually...they would pay off these "1000 Reichmark cars" would be the proud owners of one of these...however the Nazis played a cruel joke when war broke out ..they took the money from the workers, and spent it on other things, many of the party workers that saved on the instalment plan, never received their VWs.


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## AaronJBoxer (Apr 1, 2015)

Even though his contract was due to end on Friday I still think the CEO knew about it which is why he left so quick. 

I reckon the investment might be worth a punt though. Surely stories about other companies doing something similar will come out into the open making the VW recovery a little easier. People will still need cars and if other companies have done similar it will just become a "they're all the same" situation. Definitely going wait a while before moving though and see how it goes.


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## Rusty O'Toole (Feb 1, 2012)

If you believe in the "buy low - sell high" theory of investing VW should be worth a look. This scandal will blow over and their stock will be back up in a year or two. Just keep watching and buy when the bottom is in, probably a couple of months from now.


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## CPA Candidate (Dec 15, 2013)

Will VW's reputation only begin to heal when the auto cycle is winding down? That's something to think about. Auto stocks are not buy and hold, or you'll just end up in the same place many years hence.


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## MMcLaurent (May 1, 2015)

Thinking long term it *might *work out but I'm not so sure this is going to be the investment people are hoping it will be. If VW get more fines, law suits and legal bills they could fall short and not recover from this. The damage is pretty big, so future profits are not guaranteed. Personally I think this is one to avoid. Certainly until we get more info on the extent of what they have done.


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## Rusty O'Toole (Feb 1, 2012)

If BP could skate on the Mocando blowout VW can skate on this.


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## Just a Guy (Mar 27, 2012)

http://m.slashdot.org/story/300651


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