<div><strong>Mint newspaper reported on Friday (25 September) that the government has ordered a probe into Volkswagen emissions</strong><br><br><br>Volkswagen Financial Services AG’s (VWFSAG) ability to extend support to Volkswagen Finance Private Limited (VWFPL) is unlikely to be deteriorated because of the recent crisis relating to Volkswagen AG (Volkswagen), says India Ratings and Research (Ind-Ra). The agency rates VWFPL at ‘IND AAA’/Stable. VWFSAG is VWFPL’s parent and drives its long-term ratings. Ind-Ra expects VWFPL’s ratings to remain at the highest end of the national scale with a Stable Outlook. Rating change, if any, will depend on a significant rating downgrade of Volkswagen or a decline in its ownership by and support from Volkswagen or VWFSAG.</div><div> </div><div>Meanwhile, the government has ordered a probe into Volkswagen emissions after the carmaker admitted cheating on US pollution tests, citing officials familiar with the matter.</div><div> </div><div>The government has asked testing agency Automotive Research Association of India to evaluate Volkswagen cars, the newspaper said.</div><div> </div><div>"We have written to the ARAI to find out whether Volkswagen is selling the same models in India that have been found violating U.S. rules," said Ambuj Sharma, additional secretary at the Ministry of Heavy Industry.<br><br>Volkswagen was not immediately reachable for a comment.</div><div> </div><div><strong>Fitch Places VW On Rating Watch Negative</strong></div><div>Fitch Ratings Ltd placed Volkswagen’s ratings (Issuer Default Rating: ‘A’) on Rating Watch Negative on 23 September 2015. The agency expects Volkswagen's brand image and reputation with regulators and consumers worldwide to be seriously undermined by this crisis, although the magnitude and length of the operational and financial effect are difficult to assess. The agency does not expect the US Environmental Protection Agency’s fine to amount to the maximum amount of USD18bn reported in the press. Volkswagen's financial structure is sound and its free cash flow generation is robust. The US market represents only around 6% of the total group sales and a limited contagion from the US to other regions should curb the impact on Volkswagen's business and financial profiles and could lead to affirmation of its ratings. </div><div> </div><div>As a captive finance company of Volkswagen group in India, VWFPL is closely integrated with the parent for the planning and execution of business strategies for the Indian market. VWFSAG has no financing exposure to the US (to which the events mainly pertain) and its Indian operations (VWFPL; forms less than 1% of VWFSAG global operations) are unlikely to be impacted. </div><div> </div><div>VWFSAG continues to provide unconditional and irrevocable guarantees to banks in India for VWFPL's rupee-based loans facilities and Ind-Ra believes the parent is committed to inject capital as and when necessary.</div><div> </div><div>According to the statement issued by Volkswagen on 22 September 2015, the discrepancies relate to vehicles with Type EA 189 engines and involve around 11 million vehicles worldwide. The company plans to rectify these deviations through technical measures and plans to set aside EUR6.5billion in provisions to be recognised in the income statement for 3Q15 for this purpose.</div><div> </div>
