Current: Focus on Bayer and Volkswagen shares

Bulle und Bär - gute News für Bayer, schlechte für Volkswagen

There is bad news for Volkswagen at the moment, and possibly good news for Bayer. Bayer stock is up 8 percent today. According to current reports, Bayer is alleged to have reached verbal agreements on an estimated up to 85,000 of the approximately 125,000 lawsuits pending in the United States. Nothing has been decided yet, as the Bayer Supervisory Board also has yet to give its approval. The background to the lawsuits are the allegations against Bayer concerning Roundup. This product is manufactured by Bayer’s new subsidiary Monsanto and contains the allegedly carcinogenic glyphosate. Better a mass settlement than thousands of individual lawsuits with potentially much larger damages. And plus years of miserable uncertainty for Bayer’s finances. Is that what the stock market is thinking right now? This is currently driving the company’s share price.

Volkswagen

The German Federal Supreme Court (BGH) today handed down a ruling in the sense of a plaintiff consumer. In the big picture this can get expensive for Volkswagen. The court is currently writing that the buyer of a vehicle fitted with an illegal switch-off device is entitled to compensation claims against Volkswagen. He can demand reimbursement of the purchase price paid for the vehicle. But he must have the advantage of use taken into account and make the vehicle available to Volkswagen. This is the first supreme court ruling in the diesel scandal against Volkswagen.

This ruling by the Federal Supreme Court will possibly have an impact on the ongoing lawsuits before regional and higher regional courts. There are according to Volkswagen 60,000 lawsuits still pending. Following this court ruling, the Wolfsburg-based company’s share price is now “only” 0.3 percent down. Here are the comments of the Federal Court of Justice on the facts of the case. In the wording:

On January 10, 2014, the plaintiff purchased a used VW Sharan 2.0 TDl match from a car dealer at a gross price of € 31,490.00, equipped with a 2.0-liter diesel engine of type EA189, Euro 5 emission standard. The defendant is the manufacturer of the car. The mileage at acquisition was 20,000 km. The vehicle type was granted type approval in accordance with Regulation (EC) No. 715/2007 with the Euro 5 pollutant class.

The scandal

The software used in conjunction with the engine detects whether the vehicle is being subjected to the New European Driving Cycle (NEDC) on a test bench and, if so, switches to Exhaust Gas Recirculation Mode 1, a nitrogen oxide (NOx) optimised mode. In this mode exhaust gas recirculation takes place with low nitrogen oxide emissions. However, during normal driving outside the test bench, the engine switches to Exhaust Gas Recirculation Mode 0, where the exhaust gas recirculation rate is lower and nitrogen oxide emissions are higher. The nitrogen oxide emission on the test bench was decisive for the granting of type approval for the Euro 5 emission class. The nitrogen oxide limits of the Euro 5 standard were only complied with in exhaust gas recirculation mode 1.

In September 2015, the defendant publicly conceded the use of such software. On October 15, 2015, the Kraftfahrt-Bundesamt (KBA) issued a final decision against the defendant with subsequent collateral clauses on type approval, which also affects the plaintiff’s vehicle. The KBA assumed that there was an impermissible cut-off device and instructed the defendant to remove it and to ensure compliance with the relevant limit values by other means. In a press release dated November 25, 2015, the defendant announced that software updates would be carried out to remove this software from all vehicles with EA189 engines with a 2.0-liter capacity. Once installed, the vehicles concerned will only be operated in an adapted Mode 1. The plaintiff had the software update carried out in February 2017.

In his lawsuit, the plaintiff essentially demands payment of the purchase price of €31,490 plus interest concurrently. In excjange the handover and transfer of ownership of the vehicle.

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