Moody's downgrades Volkswagen on sector headwinds, competition in China

Reuters

Mon, Mar 17, 2025, 4:10 AM 1 min read

BERLIN (Reuters) - Global ratings bureau Moody's connected Monday downgraded Volkswagen by 1 notch to Baa1 from A3, citing assemblage headwinds, structural challenges, ongoing request for concern and fierce contention successful China.

"The downgrade to Baa1 reflects the caller contraction successful operating borderline and escaped currency travel generation, with constricted anticipation of a worldly betterment implicit the adjacent quarters," Moody's said successful a statement.

The standing inactive places the institution 3 notches supra junk territory.

Last week, Volkswagen forecast different challenging twelvemonth of ramping up electrical conveyance sales, cutting costs and navigating commercialized tensions amid fierce contention with cheaper and faster rivals successful China.

The carmaker is successful the midst of heavy changes including caller models and outgo cuts successful its 2 main markets of China and Germany, with net forecast to driblet successful China by up to 1 cardinal euros ($1.09 billion) successful 2025.

"These measures, provided a palmy execution could enactment an betterment successful profitability by 2026/27," Moody's said successful its statement.

It added that Volkswagen's robust equilibrium expanse "with debased leverage and precise bully liquidity ... gives the institution clip to instrumentality strategical shifts and negociate manufacture challenges."

($1 = 0.9167 euros)

(Writing by Friederike Heine; Editing by Ludwig Burger)