Fiat and PSA Downgraded by Moody’s, VW Widens Finance Edge image

After Moody’s downgraded Fiat and PSA, Volkswagen expanded its auto financing edge in Europe.

Moody’s downgraded both Fiat and PSA Peugeot Citroen from Ba2 to Ba3, while Volkswagen remains at A3, keeping its place as Europe’s biggest carmaker. Moody’s also announced that Banque PSA Finance, PSA’s financing arm, is also taken into consideration for a downgrade. VW’s current rating position helps the automaker offer better deals to consumers and dealers. In August VW’s share of the European market was up 25% from 23.2%, while Fiat and PSA saw a decrease.

According to Moddy’s, PSA’s efforts to cut costs and boost profit might not be enough to regain its position, as the European market is expected to fall 3% in 2013 and therefore the pricing pressure to go up. Fiat is not doing well either, affected by the sluggish home market and not being able to access Chrysler’s funds to make up for the loss in Europe.

Fiat CEO Sergio Marchionne said on Wednesday: “The downgrade doesn’t reflect Fiat’s financial conditions globally. They highlight an issue that impacts the whole industry, not just Fiat.”

In September, Fitch Ratings downgraded PSA three levels below investment grade, which made the automaker agree to sell 75% stake in its Gefco trucking unit.