DBRS Publishes Commentary: Japanese Automakers Battle Back with Rising Market Share in United States

DBRS has today published a commentary that considers the most recent developments among Japan’s three major original equipment manufacturers (OEMs), initially hard hit by the impact of the Great East Japan Earthquake and flooding in Thailand last year, but now recovering relatively nicely, thanks in part to a rise in market share in the ever-critical U.S. market. The commentary reviews the performance of Toyota Motor Corporation (rated AA (low), Stable, by DBRS), Honda Motor Co., Ltd. (A (high), Stable) and Nissan Motor Co., Ltd. (BBB (high), Positive).

“The double blow of the earthquake and the subsequent flooding in Thailand sent the operating performance of the Japanese OEMs into a tailspin,” says Robert Streda, Vice President. “However, DBRS continued to recognize the inherent strength of these companies, believing that the Japanese OEMs would turn things around in fairly short order.”

The commentary notes that a number of factors have enabled the automakers to regain their position in the market: new model launches; brand loyalty, which led consumers to delay vehicle purchases when production problems curtailed supply of Japanese autos; and stronger U.S. demand. Nonetheless, headwinds persist – among them, a rising yen, increased competition in the U.S. market, and sales declines in China. Overall, though, DBRS expects the credit profiles of the Japanese OEMs to remain on track. Mr. Streda explains: “We expect the Japanese OEMs’ competitive position and market share to be well defended, and possibly subject to modest gains, recognizing the strong product cadence and significant forthcoming model introductions.”

Note:
The applicable methodology is Rating the Automotive Industry, which can be found on our website under Methodologies.