The ratings on Volkswagen Financial Services AG (VWFS) are based on its status as a core subsidiary of Volkswagen AG (VW; A+/Stable/A-1) and reflect VWFS' strategic importance for and close integration into the operations of its parent. The ratings also reflect VWFS' sound asset quality, profitability, and capitalization, which mitigate concerns about VWFS' limited business diversification. Furthermore, Standard&Poor's regards VWFS as a captive finance company, which, together with its operating parent company, is seen as a single business enterprise. Standard&Poor's generally defines captive finance companies as finance subsidiaries with more than 70% of their portfolio consisting of receivables generated by sales of the parent's goods or services (for further details, see "Rating Captive Finance Companies in
