A Volkswagen-commissioned audit of its jointly owned site in Xinjiang, China, had found no signs of forced labour, the automaker said on Tuesday, although the auditor added that the challenges of data collection in China were widely known.

The audit, which was carried out by German human rights due diligence firm Loening Human Rights & Responsible Business GmbH, included on-site interviews and inspection of employee contracts and salary payments for the site's 197 employees.

"The situation in China and Xinjiang and the challenges in collecting data for audits are well known," Loening's managing director Markus Loening said in a statement, adding the mandate was limited to the employees of the Urumqi plant, which is a joint venture with SAIC Motors...

Global index provider MSC marked Volkswagen with a 'red flag' in its social issue category in November 2022 due to allegations of forced labour in Xinjiang, prompting some investors to drop the stock from their portfolios.

Analysts at Citi said that VW's findings could potentially reverse a significant part of its stock's underperformance in the wake of the rebuke...

Loening carried out the audit with two Chinese lawyers from a firm in Shenzhen, Volkswagen said, without naming them...

Volkswagen said the audit was conducted in line with the SA8000 standard, a management systems standard based on international human rights principles which assesses eight areas including child labour, forced labour and health and safety.

Still, the site had not received an official SA8000 certification, Volkswagen added. Loening is not listed on the website of SAI, which crafted the standard, as an accredited body to provide such certifications...