Volkswagen hit hard by fallout from emissions cheating scandal as investors dump stock and credit agency downgrades debt
Plunge driven by the revelation that the emissions scandal, previously confined to the company’s diesel-engined cars, also involved some of its gasoline or petrol engines as well.
Embattled Volkswagen’s credit rating was cut by Moody’s on Wednesday as the toll on the German automaker grew over its cheating on emissions.
Moody’s cut the rating by one notch to A3 after the newest allegations that Volkswagen included illegal defeat devices to hide poisonous nitrogen oxide pollution on its luxury diesel cars including Porsches.
In addition, Moody’s cited the company’s acknowledgement on Tuesday that it had under-reported CO2 emissions levels in another 800,000 vehicles, including, for the first time in the burgeoning scandal, cars with gasoline engines.
While Moody’s said Volkswagen had the financial strength to survive what could cost the company many billions of dollars in fines and compensation, it said the company’s reputation and earnings were at risk.
After the US Environmental Protection Agency accused the company of also including the defeat devices on its 3.0 liter diesel engines – used by larger, more expensive VW and Audi models and the Porsche Cayenne SUV – the company halted sales of those models in the US.
Moody’s noted that those premium cars “are top contributors to Volkswagen’s profitability”.
Shares in the world’s second-largest automaker took a fresh battering on Wednesday, losing 9.5 per cent to ¤100.45 (HK$849.76) on the Frankfurt stock exchange.
That plunge was driven by the revelation that the emissions scandal, previously confined to the company’s diesel-engined cars, also involved some of its gasoline or petrol engines as well.
German Transport Minister Alexander Dobrindt told parliament that among the 800,000 VWs in which the carbon dioxide emissions were higher than Volkswagen had originally reported, 98,000 ran on gasoline.
VW has lost nearly 40 per cent in market capitalisation since September, when the cheating revelations broke.
Chancellor Angela Merkel’s spokesman said: “[The government] believes the accusations are serious and that Volkswagen has a duty to transparently and fully clear them up. Volkswagen has made this promise.”