DBRS Places Toyota Under Review with Negative Implications

DBRS has today placed the long-term ratings of Toyota Motor Corporation (Toyota or the Company) Under Review with Negative Implications. The rating action reflects DBRS’s escalating concern that Toyota’s current difficulties will adversely affect the Company’s reputation regarding quality and safety, which will hurt sales in the upcoming months, with the long-term impact on the Company’s brand and competitive position remaining uncertain. However, the short-term ratings have been confirmed at R-1 (middle), with Stable trends, as the Company’s liquidity position continues to be abundant.

DBRS notes that Toyota recently announced a global recall of more than 400,000 hybrid vehicles, including its popular Prius model. This most recent announcement follows several earlier recalls that in aggregate total more than eight million vehicles as well as a temporary sales suspension of selected models and a week-long production shutdown at five of the Company’s North American plants (for details, please refer to the DBRS press releases dated February 4, 2010, and January 28, 2010). DBRS notes that these recalls and heightened consumer complaints across the globe have triggered increasing scrutiny of the Company from the U.S. National Highway Traffic Safety Administration and various other U.S. regulatory authorities. DBRS is now of the opinion that these developments and associated increasingly negative publicity around the Company will likely adversely affect Toyota’s sales in the short term to a greater degree than initially estimated by DBRS and considerably in excess of the 100,000-unit estimate provided by the Company when it recently disclosed its revised financial projections for fiscal 2010 (ending March 31, 2010). While it remains too early to assess the long-term impact of the Company’s current difficulties with respect to its future brand reputation and market share, the uncertainty regarding Toyota’s business profile going forward has triggered DBRS’s rating action.

Our credit review will assess ongoing developments, including any additional recalls or actions taken by regulatory authorities in the United States and across the globe, as well as the Company’s vehicle sales in upcoming months, all of which would help determine whether the Company’s current problems will ultimately have a long-term impact.

Notes:

The applicable methodology is Rating Automotive, which can be found on our web site under Methodologies.

This is a Corporate (Autos & Auto Suppliers) rating.