Yabe! (Oh shoot.) As the sun set over Toyota City and Tokyo, Toyota’s execs and Sararimen (salary men) alike were crying in their sake. Today was a sai aku (very bad) day. A day everybody at Toyota most likely would want to forget. No, no recall for a change. There isn’t much left to recall anyway, or so it seems.
The sai aku day started with Moody’s downgrading Toyota’s formerly stellar credit rating to “its lowest-ever level,” as The Nikkei [sub] laments. Moody’s came to the somewhat belated conclusion that “multi-million vehicle recalls and safety issues raise questions about its profitability and ability to stay ahead of rivals on pricing power until 2012 at the earliest.”
To make matters even more sai aku, Moody’s warned that its outlook for the rating remains negative. Why the pessimism?
“The rating action reflects the ongoing low level of profitability evident at Toyota, and which we expect to continue for an extended period,” Tadashi Usui, a Moody’s vice president and senior analyst, said. “Moreover, its product quality and recall challenges–largely centered in the U.S.–have created significant uncertainty over whether it can maintain the pricing power it has historically achieved over its rivals.”
Not sai aku enough? Wait, there is more:
“In coming years, further impacting profitability…will be the litigation costs associated with the recall; and while the size of such costs is hard to quantify, they could be material,” said Usui. “But, for now, its capital and liquidity reserves should be enough to deal with any problems.”
Minutes after the crummy news were out, Toyota’s shares headed South. The stronger Yen also didn’t help, says The Nikkei [sub]. The share opened at 3,635 Yen, dropped to 3,580, and closed at 3,600. If anyone still thinks the Yen is undervalued, please buy some quickly and send them my way. I will spend two weeks in Tokyo in May and can use a donation, as my holdings in dollars and Euros erode.
But wait, that wasn’t all.
To crown the sai aku Thursday, news reached Japan that Toyota nose-dived to 360th place on Forbes magazine’s annual ranking of the world’s leading companies. Last year, they were in third place.
The whole Forbes list is pretty kuso (shitty) as Japanese companies go. The highest-placed Japanese company was NTT, ranked 41st. Only two other Japanese made the top 100. Mitsubishi place 78th and Honda 86th. And the crowning kuso on a day that shall live in infamy?
China’s Industrial and Commercial Bank a fifth place. Yes, the bank with those non-performing loans. China Construction Bank Corp., the bank that sits on the real estate bubble, ranks 17th, right behind Berkshire Hathaway and Gazprom.
Ford is the top ranking car company at place 58, followed by Honda (86), Hyundai (188) and BMW (197)
US car makers General Motors and Chrysler, which are currently turning around their businesses after filing for bankruptcy protection last year, were absent from the list.
Germany’s Daimler was ranked 388th “and Volkswagen dropped off the list due to the complexity surrounding its 2009 merger with Porsche,” writes AFP.
In case you want to know, a bank, yes, a U.S. bank, JPMorgan Chase tops the list, removing GE from the top spot. 6 out of the top 10 companies are banks. Remember banks?
Japan’s executives consoled themselves with the fact that China’s SAIC landed on #734, and hit the futon.