Well, not as bad as it sounds. Fitch lowers Toyota's credit rating due to the market slump. Like all the other automakers, Toyota is feeling the punch of the depressed market. There are many factors driving the drop in its rating, citing one, "...The simultaneous slowdown in the major auto markets and the appreciation of the yen, which erodes the overseas earnings of Japanese exporters, were among the "multiple negative developments" Other factors such as increase in price of materials and a decrease in the ability to obtain commercial financing are two more. There is a plus side, though. "...Japanese automakers are faring better in riding out damage from the global slowdown and the recent jump in gas prices because of their reputation for fuel-efficient models." The entire article can be viewed here: Fitch lowers rating on Toyota due to market slump - NewsFlash - mlive.com I'm glad to see Toyota is doing well in spite of the economic mess.
If global demand for Toyotas falls to 6-7 million units, their rating will drop several more notches.
If you look at history, economic declines and recessions are always a positive for the strongest companies in a given industry. The weak go out of business, the middle just barely survive and invest little to nothing in R&D, and the strong continue to invest in R&D as normal. As a result, when the recession is over, survival of the fittest has been amplified. Right now, in November 2008, this is happening in every industry. Govt. Bail out aside, just as in any industry, GM would be history. When the recession is over, consumers would have fewer options and Toyota would swell in sales.
You are so right, Rybold. Like Mother Nature throwing a drought in a region to clean things up and put the ecosystem back in balance, a recession does the same with a corporation.
