Sustainability Scandal
Two top leaders from the Volkswagen group have been charged based on allegations related to the 2015 diesel-emission scandal.
Current CEO Herbert Diess and chairman Hans Dieter Poetsch were recently charged with market manipulation in Germany over allegations that they failed to inform company investors about the diesel-emissions scandal early on. On March 14, 2019, the U.S. Securities and Exchange Commission filed a complaint against the automaker, alleging that it defrauded investors by selling bonds and asset-backed securities while knowingly making misleading statements to government regulators, underwriters and consumers as to the quality of its vehicles.
Diess joined Volkswagen as CEO in July 2015 — two months prior to the scandal’s release. According to his lawyers, he will keep his role as CEO and continue to defend himself with all legal means.
Former CEO Martin Winterkorn is also charged in the case, according to an indictment filed by Braunschweig prosecutors last week. His lawyers have said he had no early knowledge of the use of a prohibited engine control software in VW’s diesel cars, stating that the essential information that would have enabled the former CEO to judge the problems correctly did not reach him in time.
In September 2015 the United States Environmental Protection Agency (EPA) issued a notice of violation of the Clean Air Act to the Volkswagen group. The agency had found that the turbocharged direct injection diesel engines had been programmed to only activate emissions controls during testing, causing the vehicle’s nitrogen oxide output to meet standards during the testing process, but emit 40 times more nitrogen oxide in real-world driving.
The case could also dim VW’s prospects in a related mass suit by shareholders that are seeking more than 9 billion euros (about CAD$13 billion) in damages over the same allegations.
VW has saved 5.5 billion euros (CAD$7.9 billion) in liabilities for diesel-scandal matters and 3.4 billion euros (CAD$4.9 billion) are related to the investor lawsuits, chief financial officer Frank Witter told analysts on May 2.
Now the Braunschweig regional court must review the indictment and decide whether to try the men on the charges. The review could take months and the lawyers of the accused will view and comment on the indictment before the judges rule. A trial could take place next year at the earliest.
Ups and Downs
On the back of a prolonged slump for auto sales in Canada, AutoCanada’s stocks plunged to a 52-week low in the final week of September.
A year ago, on Oct. 1, 2018, AutoCanada’s stocks closed at $13.49. On Sept. 27, 2019, the company’s stocks closed at $7.97. AutoCanada’s shares have dropped 26 percent in 2019 so far, with slumping sales casting a shadow over the industry and having a negative impact on the stock.
In August, the nation’s auto sales fell 0.1 percent, marking the 18th consecutive month of losses in the industry.
The company has previously managed to put together solid results in the face of any headwinds. In the second quarter of 2019, it reported a gross profit of $153.4 million — up 9.1 percent from Q2 in 2018.
Regardless, auto sales remain at historically high levels. Global Automakers of Canada president David Adams blames part of the slump on low consumer confidence.
The company has outperformed the broader industry in 2019 so far: AutoCanada’s new retail unit sales fell 1.4 percent in the second quarter, compared to a 7.8 percent decrease for the wider Canadian vehicle market, according to DesRosiers Automotive Consultants.
Drive and Loan
Ride-hailing giant Uber is reportedly exploring the option of offering financial loans directly to its drivers.
At the beginning of September, Uber sent out an in-app messaging teasing “a new financial product” to help drivers with their finances in “a time of need,” asking message recipients to fill out the survey.
One question asked, “if Uber provided you with loans, what amount are you likely to request?” It offered several answers, including amounts less than $100, between $100 and $250, between $250 and $500, and more than $500.
It is not clear if or when the loan service will be available to drivers; Uber has not publicly commented on the survey.
After the announcement on Sept. 6, Uber’s stock saw a 3.58 percent rise over two weeks, reaching a monthly high on Sept. 14, closing at $34.43.
If Uber does opt to launch a loan product, it will not be the first time the company has dabbled in such services. It previously offered cash advance programs to drivers in California and Michigan but came under fire from consumer advocates who believed the program bore some resemblance to payday loans. The company also previously offered leases on new cars to drivers.
