Global Autos - Diesel Emission Scandal Update

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

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Morningstar, Inc.

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Equity Bottom-Up

<ul><li>We believe the impact of Volkswagen's diesel scandal on the Chinese auto market is likely to be reputational in nature.</li><li>However, the fallout offers an opportunity for domestic auto manufacturers to gain market share.</li><li>The scandal is limited to emissions testing of diesel passenger vehicles, while gasoline engines dominate the passenger vehicles market in China.&nbsp;More recently, the market has also seen the emergence of hybrid and electric vehicles.</li><li>Diesel passenger vehicles account for less than 1% of total passenger vehicle sales in China, and only have a significant presence in the commercial sector.</li><li>Volkswagen is the number-one car manufacturer in China, accounting for 14% of sales in 2014.</li><li>Given the small number of diesel passenger vehicle sales in China, the direct impact from the scandal will be limited in terms of sales, but will rather manifest through the company's loss of reputation.</li></ul><p>Analysts: Phillip Zhong and Michael Wu</p><p>Full report below the fold...</p>

We believe the impact of Volkswagen's diesel scandal on the Chinese auto market is likely to be reputational in nature.However, the fallout offers an opportunity for domestic auto manufacturers to gain market share.The scandal is limited to emissions testing of diesel passenger vehicles, while gasoline engines dominate the passenger vehicles market in China.&nbsp;More recently, the market has also seen the emergence of hybrid and electric vehicles.Diesel passenger vehicles account for less than 1% of total passenger vehicle sales in China, and only have a significant presence in the commercial sector.Volkswagen is the number-one car manufacturer in China, accounting for 14% of sales in 2014.Given the small number of diesel passenger vehicle sales in China, the direct impact from the scandal will be limited in terms of sales, but will rather manifest through the company's loss of reputation.Analysts: Phillip Zhong and Michael WuFull report below the fold...

Volkswagen Scandal Positive for Chinese Auto Manufacturers

Great Wall Motor

Volkswagen Scandal Positive for Chinese Auto Manufacturers