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Moody’s Cuts Toyota Rating

29 June 2011 08:44 (UTC +04:00)

Baku - APA-Economics. Moody’s Japan K.K. on Tuesday downgraded its senior unsecured long-term rating on Toyota Motor Corp. by one notch to Aa3 from Aa2, Mainichi Daily News reported.

The rating action reflects Moody’s concern that it would take some time for Toyota to recover its previous strong profitability in view of increasing competition in the global auto market, said the Japan unit of the major U.S. credit-rating agency.

Moody’s, which last lowered its rating on Toyota by one notch to Aa2 in April 2010 following its massive automobile recalls, said it will continue its review of the automaker’s rating for possible further downgrade.

The latest downgrade incorporates Moody’s concern that Toyota’s profit recovery will "not be as strong as preferred" because of weakening market shares in various regions worldwide, the yen’s appreciation and high raw materials prices, it said.

While the competitive climate has become more intense due to the success of South Korean automakers, the revival of U.S. makers and the growing momentum of German manufacturers, "Toyota’s strategic expansion has been slower than its rivals" especially in the lower-end segment, Moody’s said.

But the Aa3 rating incorporates the faster-than-expected recovery in Toyota’s production levels following supply chain disruptions and power shortages caused by the March 11 earthquake and tsunami disaster, it added.