Downgrade, sales and loans: Rollercoaster week for VW – CNBC
Following that news, ratings agency Standard and Poor’s cut VW’s credit rating from “A-” to “BBB+,” adding that the emissions scandal contributed to the downgrade. It said that it expected weaker sales and for the carmaker to “experience ongoing adverse credit impacts.”
Alex Herbert, senior director of corporate ratings at Standard & Poor’s Ratings Services told CNBC Wednesday that VW’s reputation could be further “impaired.”
“We certainly see a risk that the image of Volkswagen could be impaired by these developments. VW stands for quality, reliability, engineering and I think here these developments go really to the heart of that and will lead customers to make an alternative choice potentially when they look to buy a vehicle,” he told CNBC Europe’s “Squawk Box.”
Herbert believed the sales impact seen in the U.S. would continue. “Already we’re seeing some market share erosion in Europe and the U.S. and we think this will potentially accelerate in the months ahead and potentially that some of these effects will broaden next year.”
U.S. regulators have recalled 482,000 diesel vehicles in the U.S. that it says contained software that turned pollution controls on for government tests and off for real-world driving.
The cars were sold between 2008 and 2015, the government said, and include the Passat, Golf, Beetle and Audi A3 models. Earlier this month, U.S. regulators also said VW installed “defeat devices” to cheat emission standards in 85,000 larger cars and SUVs.
VW announced in September that it was to set aside 6.5 billion euros ($6.8 billion) to cover the costs of recalling vehicles and compensation but could need much more as lawsuits have been filed in more than 40 U.S. states.