Velocity Vehicles, a nationwide provider of truck sales and service, had its debt rating cut two notches by Moody’s last week, a larger-than-usual reduction a few months after a similar two-step reduction by a competing agency.
While a cut of two notches at one time is not unprecedented, it is often a sign of rapidly weakening finances.
The new rating of B3 from Moody’s is considered equivalent to a B- rating from S&P Global Ratings. S&P Global has had that rating on Velocity Vehicles since December, when like Moody’s it reduced its rating by two notches in one individual action.
Both ratings are six notches less than the cutoff that marks investment-grade debt from non-investment grade debt.
Moody’s affirmed its Ba3 debt rating on Velocity Vehicles in October 2024. But it did so while changing the company’s outlook to negative from stable, often a precursor to a ratings reduction.
The subsequent reduction came in May 2025, when the new rating on the company was set at B1, down one notch from Ba3. With the move announced last week, the scorecard is that Velocity Vehicles has seen its debt rating downgraded three notches in less than one year at Moody’s.
A similar but somewhat track occurred with S&P. Velocity Vehicles was first assigned a BB- rating from S&P Global Ratings in May 2024. That was cut to B+ in June 2025, and then reduced two notches to B- in December.
“The downgrade reflects Velocity Vehicles’ weaker than expected operating performance and earnings that has resulted in a material deterioration in credit metrics,” Moody’s said in its report.
Velocity Vehicles is majority owned by Cranemere, a private equity company with a variety of holdings. Its other trucking-focused company in its portfolio is Crossroads Equipment Lease and Finance.
A request for comment to a representative from Cranemere had not been responded to by publication time.
Revenue is disclosed
While the debt ratings reports of the ratings agencies rarely disclose profitability information, they do occasionally disclose revenue figures. Moody’s said for the 12 months ending September 30, Velocity Vehicles revenue was about $3.57 billion.
As a point of contrast, publicly-traded Rush Enterprises (NASDAQ: RUSHA), which also has a network of truck dealerships, closed 2025 with revenue of $7.4 billion.
On the Cranemere site, Velocity Vehicles is described as having 78 locations worldwide for dealerships and leasing. It was founded in 1998 and has been part of Cranemere’s portfolio since 2019.
The Moody’s report was also indirectly critical of Cranemere. It said the lower debt rating also was driven by “governance considerations, particularly Velocity Vehicle’s majority private ownership under affiliates of..Cranemere..moderated in part by material minority ownership by founders and management.”
One debt series rated lower
The B3 corporate family rating does not apply across the board. Moody’s rated Velocity Vehicles’ senior unsecured notes at Caa2, which is two notches less than the B3 corporate rating. Those notes total $500 million but are also “junior” to the company’s secured debt. The size of that secured debt was described by Moody’s as “significant.”
Moody’s said the new B3 corporate rating is a reflection of the company’s “weak credit metrics,” with a debt/EBITDA ratio of 7.6X.
Moody’s did not specify that the ratio was “lease-adjusted.” But in other recent ratings actions, Moody’s in May 2025 said the lease-adjusted debt/EBITDA ratio was about 6.4X. In the December report from S&P Global, that agency said Velocity Vehicles had seen its lease-adjusted leverage “rising above 7x.”
Although both S&P Ratings and Moody’s now have Velocity Vehicles at the same equivalent debt rating, the December report of S&P Global had a more negative tone.
“We believe Velocity Vehicles’ liquidity position has weakened to less than adequate, primarily driven by reduced funds from operations resulting from lower earnings, the absence of a committed revolving credit facility (and) near-term revolver maturities,” S&P said.
Large bills coming due
It also cited two tranches of Velocity Vehicles acquisition debt to Daimler whose maturity is coming soon: $34.747 million on April 1 and $59.928 million due May 1.
But S&P in December also said the relationship between Velocity Vehicles and Daimler was “sound.” It also said Velocity Vehicles is expected to remain cash flow-positive “despite ongoing operational challenges.”
“We believe these factors will help support the company’s refinancing,” the S&P report said. “However, if we don’t expect the company to make material progress in refinancing its maturities, we could lower the ratings further. “
Unlike the recent Moody’s change to a stable outlook, S&P Global Ratings has a negative outlook for Velocity Vehicles.
“The stable outlook reflects an expectation that credit metrics will not material deteriorate from current levels and liquidity will remain adequate as well as the absence of any near term debt maturities,” Moody’s said.
There were other positives in the S&P report from December.
“We continue to expect the company to generate positive free operating cash flow (FOCF) of approximately $18 million in 2025,” S&P said. “We believe reported FOCF will improve to above $40 million in 2026, supported by forecasted profitability improvements.”
Besides its heavy debt load, Moody’s also cited the state of the truck market as driving its downgrade.
“The weakness in operating performance is largely the result of a persistent softness in freight transportation volumes driven in part by the imposition of tariffs which have resulted in cautious approach in update of trucking fleets,” Moody’s said. “We expect demand for new, used, and leased and rental (L&R) trucks as well as maintenance services to remain under pressure in 2026 and as a result expect Velocity Vehicles credit metrics to remain weak.”
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