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Filed under: Toyota, Earnings/Financials

Toyota credit rating gets cut

Car sales in the US are dismal right now, and even Toyota has been hit by anorexic demand. The Japanese automaker even resorted to 0% financing on eleven of its highest-volume vehicles, and it still didn't prevent Toyota's first quarterly sales decline in seven years. Add a surging yen and high raw materials costs into the mix, and you've got enough reasons for Fitch to cut Toyota's credit rating from a flawless AAA to AA. The lowered rating means higher interest rates on loans, though at AA Toyota will still have far more attractive loan rates than Detroit automakers.

Fitch cited the obvious problems with the global auto industry as the reason for the cut, and Toyota's downward adjustment of its sales and earnings surely didn't help. In many instances, when one credit rating company cuts a company's grade, the others are sure to follow. These are the same ratings agencies that maintained good credit rankings for the banks that are now receiving trillions of dollars of bailout help from the US government, so they're far from perfect. That doesn't help Toyota though, and the Japanese automaker could likely see still more cuts if the industry continues to struggle. Don't piles of cash and years and years of massive profits mean anything anymore? Thanks for the tip, Brian.

[Source: Forbes]

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