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Downgrade, sales and loans: Rollercoaster week for VW

Slumping U.S. car sales, a credit rating downgrade and signs that banks will help carmaker Volkswagen shoulder the costs of its emissions scandal – just another rollercoaster week for the beleaguered German auto giant.

VW's owners are set to face the company's workers on Wednesday for the first time since the scandal over emissions broke.

Chairman of Porsche and VW board member, Wolfgang Porsche, and three other board members will address thousands of workers at the automaker's Wolfsburg factory in an effort to reassure their commitment to staff that have been forced to take two weeks of unpaid leave due to falling revenue.

On Tuesday, Porsche said in a statement that he was convinced "that the city of Wolfsburg together with Volkswagen will master the situation and gain further strength," adding that the carmaker had the backing of the main family-owned shareholders.

"The Porsche and Piech families stand behind Volkswagen and Wolfsburg as its headquarters," he said.

It's only halfway through what has been a rollercoaster week for Volkswagen. On Tuesday, VW said that November U.S. car sales fell almost 25 percent from a year ago, saying the decline was due to the stop-sale for diesel-powered vehicles that the government says cheated on emissions tests.


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Following that news, ratings agency Standard and Poor's cut VW's credit rating from "A-" to "BBB+," adding that the emissions scandal contributed to the downgrade. It said that it expected weaker sales and for the carmaker to "experience ongoing adverse credit impacts."

Alex Herbert, senior director of corporate ratings at Standard & Poor's Ratings Services told CNBC Wednesday that VW's reputation could be further "impaired."

"We certainly see a risk that the image of Volkswagen could be impaired by these developments. VW stands for quality, reliability, engineering and I think here these developments go really to the heart of that and will lead customers to make an alternative choice potentially when they look to buy a vehicle," he told CNBC Europe's "Squawk Box."

Herbert believed the sales impact seen in the U.S. would continue. "Already we're seeing some market share erosion in Europe and the U.S. and we think this will potentially accelerate in the months ahead and potentially that some of these effects will broaden next year."

U.S. regulators have recalled 482,000 diesel vehicles in the U.S. that it says contained software that turned pollution controls on for government tests and off for real-world driving.

Read More What you need to know about the Volkswagen scandal

The cars were sold between 2008 and 2015, the government said, and include the Passat, Golf, Beetle and Audi A3 models. Earlier this month, U.S. regulators also said VW installed "defeat devices" to cheat emission standards in 85,000 larger cars and SUVs.

VW announced in September that it was to set aside 6.5 billion euros ($6.8 billion) to cover the costs of recalling vehicles and compensation but could need much more as lawsuits have been filed in more than 40 U.S. states.

The carmaker Wednesday came to an agreement with banks on the terms of a 20 billion euros ($21.2 billion) bridge loan to help it shoulder the costs of its emissions scandal, a source with knowledge of the situation told CNBC.

VW would not comment further. Shares of the carmaker were trading 2.6 percent lower Wednesday but Arndt Ellinghorst, head of Global Automotive Research at Evercore ISI, told CNBC the news of bank support was positive.

"This is a very normal thing to do as it gives the company time to refinance the business and avoids being forced to lock in expensive long-term debt," Herbert told CNBC Wednesday.

"It was expected them to receive backing from their banks. It is good news that this has happened fast so credit default swaps (a credit derivative that offers protection against the risk of a default) can further narrow down."

- CNBC's Nancy Hulgrave contributed reporting to this story.

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow CNBC International on Twitter and Facebook.