Stronger Auto Sales Could Help Volkswagen Offset Cheating Scandal Costs

Above-average auto sales should help the beleaguered Volkswagen auto company offset remediation costs, Moody’s Investor Services said in a report released on Wednesday.

WASHINGTON (Sputnik) — Volkswagen has admitted its diesel vehicles were rigged with software designed to lower emission levels when being tested.

"The surprising resilience of VW's [Volkswagen’s] overall business since our October scenario analysis, buoyed by continued strong consumer demand in the European automotive market, has contained the market impact of the crisis," Moody’s analyst Yasmina Serghini stated.

Volkswagen has admitted its diesel vehicles were rigged with software designed to lower emission levels when being tested.

Last month, the company reached an agreement with US regulators to buy back or fix about 500,000 of the vehicles, a plan that could cost about $10 billion.

Volkswagen executives have announced a plan to limit 2016 capital expenditures to about $13.6 billion, below its average of about $16 billion.

On Wednesday, Volkswagen executives asked shareholders to ratify managerial actions at the company’s annual meeting next month, stressing that the vote would not rule out future compensation.

However, Moody’s noted that the lack of meaningful reforms to Volkswagen’s "internal culture and governance" negatively impacts the automaker’s credibility.

The automaker still faces an ongoing investigation by the US Justice Department, and must also deal with millions of European customers whose vehicles contain the same software.