US ratings agency Moody’s has downgraded VW’s credit rating in response to the German carmaker’s deepening pollution scandal. Due to the latest revelations, the agency’s outlook for the company was negative.
Moody’s hit embattled German auto maker Volkswagen Wednesday with a credit rating downgrade, saying the company’s reputation and earnings were at risk from the widening emissions cheating scandal.
The agency cut the Wolfsburg-based firm’s rating by one step from A2 to A3, warning that fresh revelations about emission tests rigging and falsified fuel consumption data posed additional risk to the carmaker’s future sales and cash.
“The new claims pose further challenges to Volkswagen’s financial flexibility and competitive position and heighten concerns about its internal control and governance issues,” said Moody’s lead analyst for VW, Yasmina Serghini.
The ratings agency added its outlook for the company was negative, with the full scope of the scandal not yet known.
No light at the end of the tunnel
VW on Tuesday admitted it had understated the level of carbon dioxide emissions in around 800,000 cars sold mainly in Europe, with roughly 98,000 of them being petrol cars.
German Transport Minister Alexander Dobrindt announced Wednesday that all current models sold under the VW, Audi, Skoda and Seat brands would be tested for carbon dioxide and nitrogen dioxide emissions, affecting both diesel and petrol vehicles.
Volkswagen shares closed down 9.5 percent on the Frankfurt Stock Exchange on Wednesday evening, wiping more than 3 billion euros ($3.3 billion) off its market value.
The company has lost about a third of its stock value since its pollution scandal broke.
hg/tko (Reuters, AFP)