The Volkswagen emissions scandal has left a dark spot on the company’s future and reputation, with the company facing billions of dollars in fines from governments worldwide and the prospect of recalling nearly 11 million cars, Volkswagen suppliers are now feeling the heat with its equipment supplier Schaeffler cutting back on production and lowering targets.
The Volkswagen emissions scandal is the worst case scenario to the famous German automotive company, being the second largest manufacturer of cars in the world, it has left a big mark on the market that it used to dominate, however while the company braces itself for the fines and the lawsuits, The suppliers of Volkswagen are now under pressure as production of the diesel cars which constitute a major arm of Volkswagen which even uses the same type of engines in its subsidiary company Audi, the suppliers are now in trouble over the low levels of production they are facing.
The biggest hit comes to the family owned automotive equipment supplier Schaeffler which was on the prospect of a 3 billion euro IPO, The Company has been a major player in supplying equipment fitted to VW and Audi cars, but now the scandal has forced VW to stop or decrease the production of the diesel model cars which has slowed down demand for the equipment which has also forced Schaeffler to cut back on the IPO. The company is now raising 975 million Euros which is a third of the actual IPO in the initial phase. Klaus Rosenfeld, the chief executive of the company commented that the current market situation and the volatility of the market itself has forced the company to scale down on the raising of funds from the public which will be undertaken in steps further on.
The company had put up a 166 million shares for subscription by the public and had planned to begin the trading of shares in the exchanges by Monday, but now the scaling down means that not all of the 166 million shares will go up on the market with the rest of the shares to be released at a later date which the company may find suitable.
Schaeffler is known to have delivered the systems for the engine, transmission and the chassis of the car and enjoys $12.1 billion annually with 84,000 employees working in the manufacturing, R&D and sales companies which are in operation in a 170 locations in fifty countries.
Schaeffler is not the only one to face the heat, earlier one of the other companies Covestro who is one of the major suppliers of Polymers to Volkswagen had to scale down its IPO target as a result of the emissions scandal. The company operates as the subsidiary to the German Pharmaceutical giant Bayer. Volkswagen meanwhile is currently awaiting the list of fines while also bracing for the recall of 11 million vehicles to remove the defeat device which caused the problem. Get more IPO information visiting here.
please Like us at https://www.facebook.com/financetradingnew