VW Stock Falls 2.2% as Recall Hits 1M German Cars on September 25

Volkswagen and Audi are recalling nearly 1 million vehicles in Germany after regulators identified a critical steering defect. The Kraftfahrt-Bundesamt (KBA) ordered the recall due to corroding bolts on the steering gearbox that could fail under load. VW shares dropped 2.2% to €71.28 on the news. Repairs will be free, and no accidents have been reported yet.

Nearly 1 million vehicles affected in Germany

The recall impacts 895,832 Volkswagen models and 58,555 Audi Q3 vehicles in Germany, according to KBA data. Globally, the defect affects 2.16 million VW vehicles and 700,000 Audi Q3 models. VW models include Tiguan, Touran, Golf Variant, Caddy, and Golf produced between September 2013 and July 2024. Audi Q3 vehicles were built between October 2017 and May 2024. Seat also recalled 43,574 vehicles in Germany.

How the steering bolt fails

Moisture penetrates the steering gearbox fastening, causing the bolt to corrode over years. In extreme cases, the screw breaks entirely, leaving the steering rack attached at only one point. Under high steering loads during parking or low-speed maneuvers, the housing can crack, potentially causing complete loss of steering control. The KBA requires replacement with a corrosion-resistant screw.

Free repairs and no known accidents

Volkswagen will replace the defective bolt with a corrosion-resistant version at no cost to owners. The company has reported no known accidents or injuries linked to the steering defect. Owners of affected vehicles will receive recall notices from VW and should contact authorized dealers to schedule repairs.

Stock reaction and financial outlook

VOW3.DE fell 2.2% to €71.28 on September 25 amid the recall announcement. Meyka rates the stock B with a hold recommendation, citing weak profitability metrics. The company faces headwinds from declining sales and ongoing cost-cutting, including layoffs and plant closures. With a PE ratio of 6.79 and a 12-month forecast of €81.59, the stock trades at a significant discount to historical levels but remains under pressure from operational challenges.

Final Thoughts

The recall is costly but manageable: no injuries reported, repairs are free, and VW has years to complete them. However, the defect adds to investor concerns about quality control and execution at a company already struggling with profitability and market share.

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