Moody's hit embattled German automaker Volkswagen with a credit downgrade Wednesday, saying the company's reputation and earnings were at risk from the growing emissions cheating scandal.

Moody's cut the company's rating by one step to A3, warning that expanded allegations on emissions cheating and admissions that it falsified fuel consumption "pose additional risk to Volkswagen's reputation, future sales and cash" and also "suggest serious internal control and governance issues."