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Posted by: Ian Rowley on November 26, 2008
It’s not then end of the world, but Fitch Ratings decision today to cut Toyota’s AAA credit rating back to AA is yet more bad news for Japan’s number one carmaker. The downgrade, Toyota’s first in a decade, leaves only five companies in the world with triple A ratings (Exxon Mobil and Johnson & Johnson in the U.S. and three French companies).
The move comes after Toyota said earlier this month that it will make hardly any profit during the six months that end in March and that its CEO Katsuaki Watanabe will chair an “Emergency Profit Improvement Committee.” Meanwhile, the Japanese yen, remains stuck at around 95 to the dollar, which is considerably higher than the 100 to the dollar most Japanese automakers are using in their profit projections. In Tokyo trading, Toyota’s stock slipped 4.6%.
Some analysts said the Fitch’s ratings cut was unnecessarily harsh. Other rating agencies have so far spared Toyota a downgrade. Moody’s hasn’t trimmed Toyota since 1998, a decision it reversed in 2003, and Standard & Poor’s, which like BusinessWeek is owned McGraw-Hill, hasn’t cut Toyota since 1985. Of course, it’s difficult to go overboard given the woes surrounding the Detroit Three, but 2008, which should see the Japanese automaker finally usurp GM as the world’s biggest automaker after 77-years, is giving Toyota little to celebrate.
Want the straight scoop on the auto industry? Detroit bureau chief David Welch , Dexter Roberts and Ian Rowley bring daily scoop, keen observations and provocative perspective on the auto business from around the globe. Read their take on such weighty issues as Detroit’s attempt at a comeback, Toyota’s quest for dominance and the search for an efficient car.