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Industry-Wide Turbulence: Toyota in Trouble

Thursday November 20, 2008

Photo by Chris 73

With the economy tumbling downwards worldwide and Japan entering its own recession, Toyota is seen beginning to feel some credit crunch, much like the Big Three. While toyota still hasn’t much to worry about and isn’t at the point of panic, this shows that they can, will and are feeling the effects as well, to some extent, and that they are not/will not be immune to this economic downturn.

With a lower credit rating, they will now be subjected to higher lending costs and may have a harder time to obtain financing, which is part of the financial struggle currently plaguing Ford, GM and Chrysler.

(Bloomberg) Toyota Motor Corp. may have its AAA rating cut by Fitch Ratings, the first such downgrade in 10 years, as the U.S. auto slump damps earnings at the automaker with the industry’s best credit.

Toyota was placed on “Rating Watch Negative” and will be subject to a review over the next several weeks, Fitch said in a statement today. Honda Motor Co.’s outlook was also cut to “stable” from “positive.” Fitch reiterated its A+ rating for the smaller automaker.

Not limited to this credit rating downgrade, their recent woes also include sagging sales and stocks that are in a slump as well. The stocks have dropped a total of 48% this year, and sales in the US are 15% short of sales figures from last year. In either case, this marks the worse performance in decades.

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