Volkswagen scandal: With BMW and others now in the firing line, should the car industry be fearing serious contagion from the VW crisis?

Should the car industry be fearing serious contagion from the VW crisis? (Source: Getty)

Louise Cooper, a chartered financial analyst, columnist, broadcaster and blogger at coopercity.co.uk, says Yes

Three things have struck me since this story began. First, quite how much the software cheated – emissions were up to 40 times higher when the device was turned off.

VW official diesel emissions data was not that different to other car makers, so either they’ve been cheating too or their engines are far more advanced than VW’s (and is that likely?).

Second, there have been enough experts that have come forward questioning the testing procedures. It seems there have been concerns about the difference between official emissions data and the experience on the road for some time.

And third, VW cheated in Europe as well as the US. This is not an isolated incident, it is widespread. The stock market is sceptical as well. BMW shares plunged by as much as 9 per cent yesterday.

Companies don’t admit fraud. VW didn’t freely admit mea cupla – the regulator forced the information out of it.

Of course, as an owner of a Ford Focus with a diesel engine, I would like to be proved wrong. I’d like to think better of human nature.

Darius McDermott, managing director at Chelsea Financial Services, says No

BMW has said that it hasn’t done anything wrong. But with markets, companies are guilty until proven innocent, and the whole sector has been hit quite badly in the past few days.

Contagion is a possibility in the short term, but it could also result in some good buying opportunities.

We haven’t seen the specifics of the test of the BMW car, but there is a difference between a vehicle exceeding emissions levels and installing a device that alters the test readings.

The car makers that stand accused of wrongdoing could gain market share later on, and will be keen not to become further embroiled in the scandal in any way.

This type of thing can drag on and costs can rise exponentially, so VW is far from being a recovery stock yet. BMW has premium products, so has been able to play the affluent Asian consumer.

While local Chinese companies could develop mass market cars themselves, premium cars with a strong brand are less easily copied.

For the moment, it’s a case of wait and see, but I certainly wouldn’t sell BMW just yet.

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