Standard & Poor's rating agency on April 25 revised from "stable" to "negative" its outlook for top Japanese automakers Toyota, Nissan and Honda, citing the impact of the March 11 quake and tsunami.
It made the same revision for three major auto parts suppliers -- Aisin Seiki, Denso, and Toyota Industries -- citing production slowdowns and stoppages, electricity supply disruptions and lower consumer confidence.
S&P said it expects that the six companies will experience "deteriorated operating and financial performance" in fiscal 2011 due to production cuts resulting from parts shortages following the devastating quake.
"The outlook revisions also reflect our opinion that extended production cuts may erode Japanese automakers market shares and competitive positions in the longer term," the agency said in a statement.
S&P however affirmed its ratings on all the companies because it expected the impact of the disaster to be less than that of the 2008 financial crisis.
"Unlike after the Lehman shock, vehicle demand prospects remain solid in North America and emerging markets, and automakers could partially make up for lost production by increasing output in the latter half," S&P said.
Toyota, the world's biggest automaker, said on April 25 that March output in Japan plunged 62.7% year-on-year, while Nissan suffered a 52.4% domestic decline and Honda Motor a 62.9% fall.
Toyota has announced production disruptions at home and in the United States, European Union, China and Australia because of the crisis, temporarily shutting some plants or running them at half-capacity or less.
The company said last week it expects output will start recovering in mid-year but will not be back to normal until the end of 2011.
S&P said supply chain disruptions are posing a greater challenge for Japanese automakers than it had initially anticipated and had forced virtually all Japanese automakers to significantly cut output in Japan. "The impact is also starting to spread to production outside Japan," it said. "At most Japanese automakers, overall domestic and overseas output is currently at about 50 percent of initial production plans."
The agency said that it expected parts shortages to be largely resolved by July but cautioned that "full production is unlikely to recover in the summer" due to power shortages and a time lag for parts to arrive at overseas plants.
"We currently expect automakers to eventually return to full or near full production by around October," it said in a report.
"We also think the timing may vary among automakers by one to two months as Toyota Motor announced that it expects its production to normalize around November or December."
Copyright Agence France-Presse, 2011
Toyota Downgraded by Standard & Poor's