Stock watch: Volkswagen fights to win back investors

Stockmarket-Stock-Market-FTSE-Performance-700x450.jpgVolkswagen is facing an even-greater uphill battle to regain investor confidence and public trust after the group posted its first quarterly loss for 15 years.

On Wednesday the embattled car makeret set aside €6.7bn (£4.84bn) to cover the costs of the diesel emissions debacle, after posting a pre-tax loss of €2.5bn in the third quarter despite the company making an operating profit of €3.2bn, as it had to s.

In a statement accompanying its latest market update chairman of the board of management of Volkswagen Aktiengesellschaft, Matthias Müller, urged: “We will do everything in our power to win back the trust we have lost.”

However VW now anticipates that 2015 operating profit for the group will “be down significantly year-on-year”.

Investor confidence in VW has plummeted after it emerged in September that it had installed specialist software in some 11m automobiles in a bid to cheat emissions tests.

According to data from FE Analytics, as of 28 October, just three funds count VW among their top 10 holdings.

Hermes’ Absolute Return Credit and Multi Strategy Credit funds, carry respective allocations of 4.5 and 4.9 per cent, while Man GLG’s European Alpha Alternative portfolio has a lower 1.6 per cent of its assets invested, down from the 2.14 per cent it had allocated in mid-September.

Laith Khalaf, senior analyst at Hargreaves Lansdown, believes it is going to be “a long road back for Volkswagen to regain public trust” and that the billions put aside to cover the cost of the emissions scandal is likely to be just the tip of the iceberg for the car manufacturer.

He says: “The company not only faces the cost of fixing the affected cars, but also fines from various countries, compensation claims, possible lawsuits from customers and shareholders, and the chance of criminal prosecution, not to mention the reputational damage done to the brand.

“Volkswagen is facing a big black hole that it’s going to have to throw money at for the foreseeable future, and at the moment it has no idea how deep that hole is. The lesson for Volkswagen is that it takes an awfully long time to clear the air.”