Toyota Credit Rating Cut by Moody’s on Weak Profit Outlook
TOKYO - Toyota Motor Corp.’s credit rating was cut today by Moody’s Investors Service, and Fitch Ratings said it may also downgrade the world’s biggest carmaker as recalls of more than 8 million vehicles ravage profit, Bloomberg reported. The rating was reduced to Aa2, the third-highest grade, from Aa1, according to a statement from Moody’s, which stripped Toyota of the top Aaa rating last year. Fitch will examine the company’s creditworthiness and a downgrade is a “possibility,’ senior analyst Jeong Min Pak said in an interview. Toyota faces at least 180 consumer and shareholder lawsuits stemming from recalls due to unintended acceleration and may suffer $2 billion in lost sales and warranty repairs. The company recalled its Lexus GX 460 SUV and agreed to pay a record $16.4 million U.S. fine this month, further tarnishing its reputation for safety under President Akio Toyoda. Increased costs related to the recalls “will hurt Toyota down the road,” said Pearlyn Wong, an investment analyst in Singapore at Bank Julius Baer Co., which manages about $350 billion worldwide. “Litigation costs are very hard to model.” Toyota faces a “material risk” that its operating profit margin will remain well below what is appropriate for its rating “until 2012 at the earliest and possibly beyond,” Moody’s analyst Tadashi Usui wrote. Fitch will examine Toyota “closely” in the next six months, said Jeong Min Pak, a senior director at the company, by phone from Seoul. Separately, Moody’s also downgraded Denso Corp.’s credit rating to Aa3 from Aa2. Denso, which is 22.54 percent owned by Toyota, produces electronic and other parts for automobiles.
More Industry

Pennsylvania Dealership Under New Retailers
The sale of the Chrysler Dodge Jeep Ram store puts a family auto group on a leaner path as first-time dealers take the helm.
Read More →
Battery Storage Takes Priority Over EVs
U.S. automakers are prioritizing battery energy stationary storage over electric-vehicle production as the consumer demand for EVs lags the rest of the world.
Read More →
Auto Dealers Feel Better But Not Great
A second-quarter Cox Automotive poll of franchised retailers and independents found better views of the current market after a good spring but anticipation of third-quarter storminess.
Read More →
New-Vehicle Sales Picture Relative
A May forecast is complicated by last spring’s trade tariff effects on auto retail. Despite continued hard realities, many consumers took advantage of ways to bite the bullet.
Read More →
Auto Group Acquires Third Nissan Rooftop
Iowa-based Coleman Automotive Group recently acquired its seventh dealership, McGrath Nissan, which it renamed Nissan of Elgin.
Read More →
April Less Affordable
Based on prices, reduced incentives and slower household income growth, consumers found it more challenging to buy new last month, Cox Automotive reported.
Read More →
Building an Extraordinary F&I Agency
Work to determine your specialized talent, because that fact will determine everything about your agency’s future.
Read More →
Recipe for Compliance
The secret to both amazing barbecue and compliance is the same: understanding the basics and committing to a process.
Read More →
EVs Getting More Attractive
A growing percentage of U.S. consumers are open to switching and fewer are adverse to the idea, according to a recently completed survey. That’s despite the end of a tax break.
Read More →
EV Sales Drop in April Following Surge
North American electric-vehicle sales were down 28% year-over-year, a sharp contrast from global EV sales growth of 6%.
Read More →