Owners of the German auto-manufacturer should be ready to cut and run after Reuters reported that “Volkswagen AG (VOWG_p.DE) and its Chinese joint ventures FAW-Volkswagen and SAIC Volkswagen will recall 4.86 million vehicles in China due to potential issues with Takata Corp air bags, a blow to the carmaker in the world’s largest auto market.”
The recall could prove disastrous for VW who’s expansion into China could face a major hurdle as a result of the story.
The Official Chinese estimates show over 20 million cars in China had air bags made by Takata, which have been linked to at least 16 deaths and 180 injuries globally. The air bags have the potential to explode with too much force and spray shrapnel.
The now defunct Takata Company has caused many automotive companies to go through similar issues in the past. As a result VW will need to try and mitigate the damage to their brand and stock in the coming weeks. If you own Volkswagen stock, be prepared to cut your losses should things get worse.
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