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Volkswagen (VLKAY) to Recall 411K Polo and Seat Vehicles

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Per Reuters, Volkswagen AG (VLKAY - Free Report) announced that it will recall roughly 220,000 units of new Polo vehicles due to defective rear seatbelt lock. Additionally, 191,000 cars of the company’s Spanish subsidiary Seat are also affected. The recall will begin in the coming weeks. The affected vehicles have a technical problem, which in unusual situations could release the rear left seatbelt.

The worldwide recall is restricted to regions where Seat and Polo cars are sold. The affected models under Seat include the 2018 models of Arona, and 2017 and 2018 models of Ibiza.

Almost at the same time, Volkswagen’s subsidiary Audi AG announced that will present a software upgrade to Germany's motor authority KBA for roughly 60,000 cars after detecting emission-related problems. Further, the auto manufacturer stopped selling its A6 and A7 models after finding a problem with emissions software for a specific type of diesel engine.

Volkswagen AG Price and Consensus

 

In March, the company announced roughly 4.86 million vehicle recall in China due to Takata-airbag problem. The recall was applicable to both imported and locally-manufactured vehicles.

These recalls are likely to add to the company’s expenses, which are already hit by penalties for the emission scandal of September 2015. Further, this is likely to reduce the already-dented consumer confidence in the brand.

Price Performance

In a month’s time, Volkswagen’s stock has declined 4.6%, underperforming 2.2% gain of the industry it belongs to.

 

Zacks Rank & Other Stocks to Consider

Volkswagen currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the auto space are Fiat Chrysler Automobiles N.V. (FCAU - Free Report) , Oshkosh Corporation (OSK - Free Report) and General Motors Corporation (GM - Free Report) . Fiat Chrysler and Oshkosh sport a Zacks Rank #1 (Strong Buy) while General Motors carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fiat Chrysler has expected long-term growth rate of 23.7%. In a year’s time, shares of the company have gained 103.7%.

Oshkosh has expected long-term growth rate of 18.3%. Shares of the company have risen 11.9% over the past year.

General Motors has expected long-term growth rate of 5.5%. Over the past year, shares of the company have gained 9%.

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