Fitch Downgrades Toyota Credit Rating Again

Fitch Ratings on Wednesday downgraded its credit rating on Toyota Motor Corp. for the second time in seven months, saying it had been slower than its rivals to respond to the current industry crisis. Fitch lowered its long-term debt rating on Toyota by two notches, from "AA" to "A-plus." "Fundamentals in the automobile industry are likely to remain weak in the medium-term, making it difficult for automakers to regain levels of profitability reached in the easy-credit-fueled boom which came to an end in the fourth quarter of 2008," said Fitch analyst Jeong Min Pak. In late November Fitch had downgraded Toyota to "AA" from "AAA", saying the automaker no longer deserved its top rating. Toyota overtook General Motors in 2008 as the world's top selling automaker. But it fell into the red for the first time in nearly 70 years in the year to March with a net loss of 436.9 billion yen (US$4.5 billion) and expects an even bigger shortfall this year. "Although Toyota remains the strongest player in the industry its recent operating performance, strategic decision-making and management reaction to the crisis have been less impressive than its peers," Fitch said. "It may take several years for Toyota to approach previous levels of profitability, unless it takes swift actions to reduce costs and restructure its production facilities and product portfolio." Toyota has shed thousands of temporary workers since the global economic crisis erupted, but has so far avoided closing plants or firing regular employees. Copyright Agence France-Presse, 2009