Standard & Poor’s Says Japanese Auto Outlook Now Negative

AutoInformed.com

The negative outlook means it is likely that an S&P downgrade the automakers credit ratings is likely as financial results are posted for the Japanese Fiscal Year, which ended on 31 March.

Standard & Poor’s Ratings Services in Tokyo today cut its outlook on six Japanese auto companies from stable to negative, including the Japanese Big Three – Toyota Motor Corp. (TM, 7203.TO), Honda Motor Co. (HMC, 7267.TO) and Nissan Motor Co. (NSANY, 7201.TO).

The rating agency – infamous for its phony positive ratings that were key to the housing market collapse in 2007-2008 – does not think production disruptions caused by the Japan Earthquake and tsunami back in March will be resolved until this fall. 

S&P says that the extended production cuts may erode Japanese automakers’ market shares and competitive positions in the longer term.

The negative outlook means it is likely that an S&P downgrade the automakers credit ratings is likely as financial results are posted for the Japanese Fiscal Year, which ended on 31 March – 20 days after the earthquake shut the country down, or the first quarter of FY 2012at the end of June.

Virtually the entire Japanese auto industry is struggling to return to normal levels of production, now running at about half that rate at a time when the global auto market is slowly recovering from the 2008 Great Recession.

Standard & Poor’s also cut its outlooks on Aisin Seiki Co. (7259.TO), Denso Corp. (DNZOY, 6902.TO) and Toyota Industries Corp. (6201.TO), a Toyota Motor subsidiary  that makes equipment for the automotive and other industries. Its outlook for Mitsubishi Motors Corp. (7211.TO, MMTOY) remains negative.

S&P still has an investment-grade rating for each of the companies except Mitsubishi Motors, which it rates B+, four steps into the junk category.

About Ken Zino

Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn. He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe. Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap. AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks. Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.
This entry was posted in auto news, economy, manufacturing, news analysis and tagged , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *