VOA Breaking News
Voice of America
March 4, 2011 at 7:15 pm
A major financial services firm has cut Toyota's credit rating because it says the world's biggest automaker is not profitable enough.
The Japanese carmaker is predicting it will have $6 billion in profits for the year ending later this month. But the Standard & Poor's ratings service said Friday that it is downgrading the automaker's credit standing by one notch from AA to AA-minus. The ratings service said Toyota's profitability is “still weak” and was improving at a slower pace than its key Japanese rivals, Honda and Nissan.
The agency said the automaker's profitability is unlikely to recover enough in the next year or two to justify continuing the higher rating. Toyota has had to recall more than 14 million vehicles since late 2009 for various safety issues. Now, Toyota's lower credit rating means the automaker will have to pay higher interest rates on money it borrows to finance its operations.
The company called the downgrade “regrettable.” Toyota said it wants to continue to “take care” of its customers and would work toward increased profitability over the long term.