VW's Diesel Scandal Sparks Europe Debt-Crisis Flashback
- Higher funding costs at banking arm could hurt competitiveness
- Assets at finance unit amount to 39% of Volkswagen Group
The Long Rise and Rapid Fall of Volkswagen
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Volkswagen AG’s finance unit is seeing funding costs rise as turmoil from the diesel-cheating scandal spreads, adding to the beleaguered carmaker’s woes.
The banking arm, which makes loans to auto buyers and dealerships and takes consumer deposits, may have to pay higher rates to customers and on securities backed by its loans, said Otto Dichtl, a credit analyst at Stifel Nicolaus Europe Ltd. That could squeeze profit and erode competitiveness.