DBRS Comments on Volkswagen’s Sale of its Brazilian Heavy Truck Business

DBRS notes that Volkswagen AG (VW or the Company) today announced its intention to sell its heavy truck business to MAN AG (MAN). Brazilian-based Volkswagen Caminhöes e Õnibus Indústria e Comércio de Veículos Comerciais Ltda (VW CO) is to be acquired by MAN for approximately EUR 1.175 billion; the transaction is expected to be completed in the first quarter of 2009. While the divestiture further bolsters the significant net cash position of VW’s automotive operations, the ratings are not impacted as the Company’s business profile has not materially changed with VW remaining Europe’s largest automotive manufacturer, ranking fourth on a global basis.

With the sale, the Company’s involvement in the truck business will consist of its existing shareholdings of approximately 29.9% and 68% in MAN and Scania AB respectively. As such, VW will continue to have an indirect beneficial interest in VW CO through its significant ownership of MAN. DBRS notes that as a result of this transaction, VW’s Commercial Vehicles segment will focus exclusively on light commercial vehicles going forward.

Note:
All figures are in euros unless otherwise noted.

The applicable methodology is Rating Automotive, which can be found on our website under Methodologies.

This is a Corporate rating.