German investor confidence down as VW adds to worries

As a result, the value of the “Made in Germany” brand has fallen 4pc – or $191bn – to $4.2 trn (£2.74 trn) this year. The latest drop in the headline index was steeper than analysts had expected, and came on the day Volkswagen said it would slash its annual investment budget by one billion euros ($1.13 billion) for its main VW brand.

Brand Finance disagrees. According to the report, the emissions scandal “has dealt a hammer blow not just to Volkswagen’s reputation but potentially to the entire German nation brand”.

“[The] German industry is lauded for its efficiency and reliability while Germans as a whole are seen as hard-working, honest and law abiding”.

Last month, VW became embroiled in the biggest scandal in its history, when U.S. authorities accused it of fitting diesel cars with devices that can switch on pollution controls when they detect the auto is undergoing testing. Brand Finance said the city-state’s first prime minister, Lee Kwan You, had provided the “vision, pragmatism, longevity, intolerance of corruption and relative benevolence” that undergirded its success.

Brand Finance ranked Germany as the world’s most powerful national brand but said that status is “under threat” as it prepares to release its 2015 findings in November. Brand Finance said this is largely due to the sheer size of the American economy.

The business daily, citing company sources, said the measure would be part of a broader cost-cutting program including pay, marketing, sponsoring activities and variety of models to help it bear an estimated 40 billion euros in costs of the scandal.

It added: “The U.S.’ world-leading higher education system and the soft power arising from its dominance of the music and entertainment industries are significant contributors too”.