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AUTOMOTIVE: Volkswagen (VW A3/BBB+/A-): S&P Comments

AUTOMOTIVE
BulletCredit Bullets

Lower ratings headroom for VW. Execution of planned restructuring is a key risk.

  • S&P commenting that VW’s credit metrics for 2024 will fall below the rating threshold for its rating following the latest profit warning.
  • Given the one-off impact of restructuring costs they are willing to look through that. They see metrics back in line with the rating in 2025.
  • Capex efficiencies as well as cost savings from restructuring are required for VW to meet profitability metrics. This is expected to be achieved through slower in-house battery development and partnerships, in line with VW’s recent strategy.
  • They expect the dividend policy and lack of share buybacks to remain supportive for credit.
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Lower ratings headroom for VW. Execution of planned restructuring is a key risk.

  • S&P commenting that VW’s credit metrics for 2024 will fall below the rating threshold for its rating following the latest profit warning.
  • Given the one-off impact of restructuring costs they are willing to look through that. They see metrics back in line with the rating in 2025.
  • Capex efficiencies as well as cost savings from restructuring are required for VW to meet profitability metrics. This is expected to be achieved through slower in-house battery development and partnerships, in line with VW’s recent strategy.
  • They expect the dividend policy and lack of share buybacks to remain supportive for credit.