Volkswagen’s credit rating has been downgraded by Fitch Ratings to BBB+, from A. Fitch has also given the car maker a negative outlook. The downgrade comes as VW Group struggles under the weight of its diesel emissions crisis and its associated costs.

Fitch said the downgrade “reflects the corporate governance, management and internal control issues highlighted by the ongoing emission test crisis related to up to 11 million diesel-powered vehicles”. Fitch said that the “emergence of a fraud of this magnitude, going either unnoticed or uncorrected by top management for so long is not consistent with a rating in the 'A' category.” Volkswagen's recent admission that it understated carbon dioxide emissions on 800,000 vehicles reinforces this view , it said.

The downgrade also reflects the expected direct and indirect financial effects from this crisis including recall costs, fines, lawsuits and legal claims worldwide as well as lost sales and revenue and “probable discounts on vehicle sales”.

Fitch also said that it is too early to quantify precisely the magnitude and timeframe of the costs of the crisis and its consequences on the group's revenue, income, cash generation and key credit ratios.

It added that the latest findings unveiled by the company's ongoing internal investigation are increasing the damage to Volkswagen's image and reputation and could potentially lead to further legal claims from regulators and customers, further impacting the group's revenue and earnings.