Fund managers anticipate the Volkswagen emissions scandal will have immediate implications for the global auto sector, but many are uncertain on the longer-term impact and are maintaining current positions.
It was revealed last week the German car manufacturer had manipulated diesel emissions tests in the US and Europe, prompting its share price to collapse by 34% since scandal first emerged, to its current value of €107.
VW's CEO Martin Winterkorn announced his resignation amid the unfolding scandal, and is now under investigation by the German prosecutors. Meanwhile, the company set aside €6.5bn in legal provisions, a figure considered inadequate by many sector experts.
Mark Holman, CEO of TwentyFour Asset Management, compared the scandal to the BP oil spill disaster in the US, which cost the oil giant $18bn in damages, saying the provision VW has set aside is "nowhere near enough".
"The newsflow has only just begun and there is a lot more to follow on this story," he said.
"There are likely to be law suits, criminal actions, board level firings, rating agency downgrades, stock price revisions, maybe even selling restrictions on the company, brand damage, increased financing costs, and removal from SRI indices."
