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Volkswagen (VLKAY) Plans Production Halt to Tackle WLTP

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Per Reuters, Volkswagen AG (VLKAY - Free Report) plans to close its Germany-based Wolfsburg factory for one to two days per week, between August and September. During the production halt, the company will deal with problems caused by engine emission tests. Except for Wolfsburg hub, facilities at Zwickau and Emden will also remain closed for a few days.

A new Worldwide Harmonised Light Vehicle Test Procedure (“WLTP”), which works on real-driving information, has found higher carbon dioxide emission readings in a few vehicles. The new readings have deferred official road certification for those vehicles and thus, sales.

These delays have deterred the company to be on track with the production of some of its vehicle models at different hubs. Further, Volkswagen has witnessed a probable dip in sales due to stricter emission tests. Last week, Daimler AG (DDAIF - Free Report) blamed WLTP and trade wars for lowering its income guidance.

Volkswagen AG Price and Consensus

Volkswagen’s another factory at Zwickau will also close for a few days, which will impact the manufacturing of components. Additionally, the company’s Emden hub will shut down the production of mid-sized cars for a few days in the third and fourth quarter, due to declining demand.

Price Performance

Over a month, Volkswagen’s stock has moved down 13.6%, underperforming 4.3% decline of the industry it belongs to.

Zacks Rank & Stocks to Consider

Currently, Volkswagen has a Zacks Rank #4 (Sell) while Daimler has a Zacks Rank #2 (Buy). A few better-ranked stocks in the auto space are Visteon Corporation (VC - Free Report) and Peugeot SA (PUGOY - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Visteon has an expected long-term growth rate of 15%. Shares of the company have risen 32% over the past year.

Peugeot has an expected long-term growth rate of 19.2%. Shares of the company have risen 16.7% over the past year.

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