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.
