Amid Widespread Credit Downgrades for Automakers, Fitch Recognizes Management Stability of Hyundai Motor Company and Toyota

Although the credit ratings and outlooks of global automakers have declined amid the economic downturn and the impact of U.S. tariffs, Hyundai Motor Company and Toyota have been recognized for their management stability. This is interpreted as a reflection of the high competitiveness of their eco-friendly vehicles, such as electric and hybrid cars.

On the 21st, the green light is on at the traffic signal in front of Hyundai-Kia Motors headquarters in Seocho-gu, Seoul. Photo by Jin-Hyung Kang aymsdream@

According to the automotive industry on November 9, global credit rating agency Fitch recently maintained Hyundai Motor Company's credit rating at A- and Toyota's at A+. The outlook for both companies was also assessed as 'Stable.' Fitch, along with Moody's and Standard & Poor's (S&P), is considered one of the world's three major credit rating agencies. In Fitch's rating system, A+ is the fifth highest out of 20 grades, and A- is the seventh. Both ratings indicate a sound credit status.

Fitch stated that while Hyundai Motor Company and Toyota may experience a short-term decline in profitability due to reciprocal U.S. tariffs, it maintained their credit ratings considering their product and brand competitiveness, diversification of sales regions and powertrains, and financial soundness. In particular, the strong competitiveness in eco-friendly vehicles was cited as a key factor for the positive evaluation.

However, Fitch downgraded the credit ratings and outlooks of other global automakers across the board. This year, Fitch downgraded Nissan's credit rating to BB, which is considered non-investment grade. Honda and Volkswagen maintained their ratings at A and A-, respectively, but their outlooks were downgraded from 'Stable' to 'Negative.' A 'Negative' credit outlook generally indicates that a company's credit rating could be downgraded within two years.

Fitch assessed that Volkswagen is facing intensified competition in the Chinese market and a decrease in cash flow. In Honda's case, while the motorcycle segment remains strong, the profitability of the automotive segment is low, resulting in an unbalanced business portfolio. Industry observers predict that, if these negative outlooks lead to further downgrades, only Asian automakers such as Toyota and Hyundai Motor Company may remain with a rating of A- or above.

In addition to Fitch, Moody's and S&P are also downgrading the credit ratings of global automakers. This year, Moody's downgraded Volkswagen's rating by one notch from A3 to Baa1. Toyota's outlook was lowered from 'Positive' to 'Stable,' and Stellantis from 'Stable' to 'Negative.' Standard & Poor's also gave a 'Negative' outlook for Honda (A-), Stellantis (BBB), and Ford (BBB-).

This year, Hyundai Motor Company is the only automaker to receive an A rating or higher from all three major global credit rating agencies without a downgraded outlook. Hyundai Motor Company was rated A3 by Moody's, A- by Standard & Poor's, and A- by Fitch. All three agencies maintained a 'Stable' outlook for Hyundai Motor Company.

This content was produced with the assistance of AI translation services.