Volkswagen’s credit rating will suffer if the alliance with Suzuki is ended, Moody says

Article by Christian A., on October 25, 2011

Moody's investors service said that Volkswagen’s credit rating will suffer if it ends its alliance with Suzuki since it will have an impact on its growth options in Asia, specifically in India. In Moody’s weekly credit outlook report, it said that Volkswagen seeks to reinforce its position in India and the rest of Asia via its partnership with Suzuki.

Moody’s rate for Volkswagen since Aug. 30 is A3, the fourth-highest investment grade. Moody’s has kept its positive outlook for the automaker since giving this rating.

Volkswagen, which holds a 19.9% stake in Suzuki, claims that Suzuki breached a cooperation agreement by buying engines from Fiat S.p.A. Chairman Osamu Suzuki, on Sept. 22, had demanded a retraction, saying that this accusation “significantly disparaged Suzuki's honor."

The conflict between the two automakers started when VW’s March annual report had said that it has the power to “"significantly influence financial and operating policy decisions" at Suzuki. VW referred to Suzuki as an "associate."

A few weeks ago, VW was served with a notice of breach of contract by Suzuki, which also demanded that it be given access to VW’s key technologies within weeks. Suzuki said that if VW won’t give in to the demand, it would have to sell back its stake and quit the alliance.

On the other hand, VW said that it may take legal action against the Japanese company. According further to the Moody's report, VW is expected to develop its own small entry-level vehicle for the Asian markets but it would have difficulty in meeting the low-cost budget needed for a product to be profitable in this segment. [source: Autonews]

Topics: vw, suzuki

If you liked the article, share on:

Comments

Recommended

Polestar is notably known to be Volvo's internal performance specialists, and around last year Polestar revealed to the public that it will utilize electrification to further advance the power of...
by - June 26, 2017
Earlier this month, Porsche introduced to us the 911 Turbo S Exclusive Series. The car wore a Golden Yellow Metallic paint. The same time it was launched, the company said...
by - June 26, 2017
Last month, the Lamborghini Centenario made its way to the Transformers: The Last Knight premiere where it got the attention of many. Following that event, three Lamborghini Centenario coupes landed...
by - June 26, 2017
The Holy Trinity of hypercars may not be accessible anymore after being discontinued, but that doesn’t mean we won’t see any more hypercars in the future. What we know is...
by - June 26, 2017
Kia is taking things a step further with the new Kia Stinger, which they first introduced at the 2017 Detroit Auto Show. With the specs given to us by the...
by - June 25, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries