Standard & Poor's slashes Volkswagen's credit rating on emissions scandal

 
Emma Haslett
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The company was placed on negative watch in September (Source: Getty)

More bad news for beleaguered car maker Volkswagen, after Standard & Poor's lowered its credit rating, as well as its bank and financial services arms.

In a statement today, S&P said it was lowering VW's long- and short-term ratings to A/A-2, from A/A-1, and left its outlook at "negative", taking the same action with VW Financial Services and VW Bank.

S&P said the move "reflect[s] our view that VW continues to face wide-ranging negative credit consequences" from the admissions scandal, during which it has admitted to installing "cheating" devices on 11 million cars which allowed engines to look more efficient than they actually were.

"The downgrade reflects our assessment that VW has demonstrated material deficiencies in its management and governance and general risk management framework," it said.

"We believe VW's internal controls have been shown to be inadequate in preventing or identifying alleged illegal behavior in the US and misconduct in other regions. We understand the software was installed in VW vehicles over a period of several years, in a number of vehicle brands and models, and appears to have been intended to deliberately mislead regulators, governments, and consumers.

Our assessment of VW's risk management framework includes our view of VW's management of its material environmental and social risks. We believe that VW's breach of U.S. environmental law and potential other laws outside the US represents a significant reputational and financial risk to VW over the medium term."

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