Toyota Faces Credit Downgrade
There is no doubt that this auto crisis has created a tremendous amount of varied opinion on whether these companies should get bailed out. Some blame unions, some blame management and some blame the government. But, the crisis and many data points surrounding this crisis are often misunderstood. And, many with the microphone clearly perpetuate outright lies to keep it that way.
When this crisis first broke and everyone wanted to highlight this as an American auto industry problem. Many inaccurately then pointed to Toyota as being perfectly healthy. We highlighted that Toyota could face severe problems of their own. Toyota's sales are down more than Ford's and similar to GM's. And, now Toyota has just reported it will file its first operating loss. Ever.
Wednesday S&P issued a report that highlights their credit concerns at Toyota. Over the last few years we highlighted many fundamental reasons that left us bearish on the mighty industrial powerhouse's stock. Now many of these fundamentals are starting to show their hand. I won't go so far as to say a downgrade is imminent but I would be surprised if it doesn't happen at some point. Toyota likely has significant challenges dead ahead as do all global auto makers. Challenges that will adversely impact company financial positions quite negatively.
We'll talk more about the auto industry in the future but the global auto industry crisis is more complex than the flippant position that GM management needs to be changed or that GM doesn't build cars people want. Those statements have truth to them and we were a lonely voice discussing those issues on here three years ago. But, the cause of the auto crisis is very marginally related to those problems.
When this crisis first broke and everyone wanted to highlight this as an American auto industry problem. Many inaccurately then pointed to Toyota as being perfectly healthy. We highlighted that Toyota could face severe problems of their own. Toyota's sales are down more than Ford's and similar to GM's. And, now Toyota has just reported it will file its first operating loss. Ever.
Wednesday S&P issued a report that highlights their credit concerns at Toyota. Over the last few years we highlighted many fundamental reasons that left us bearish on the mighty industrial powerhouse's stock. Now many of these fundamentals are starting to show their hand. I won't go so far as to say a downgrade is imminent but I would be surprised if it doesn't happen at some point. Toyota likely has significant challenges dead ahead as do all global auto makers. Challenges that will adversely impact company financial positions quite negatively.
We'll talk more about the auto industry in the future but the global auto industry crisis is more complex than the flippant position that GM management needs to be changed or that GM doesn't build cars people want. Those statements have truth to them and we were a lonely voice discussing those issues on here three years ago. But, the cause of the auto crisis is very marginally related to those problems.
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