Toyota's (TM) Credit Rating Downgraded by Standard & Poor’s

Toyota (NYSE:TM) has made improvements in recovering from the recall crisis of 2010, but it is still paying a stiff price when it comes to the bottom line, according to Standard & Poor’s.

The agency on Friday cut its credit rating on Toyota to AA- from AA, citing profit concerns. At the fourth-highest level, that’s still a strong debt rating, especially compared with Toyota’s car-making rivals, but it seems like a long way off from the bulletproof AA+ Toyota enjoyed in 2009. See report on S&P action.

“Because the company’s profitability is still weak, its pace of recovery is slower than those of Japanese peers, and its profitability might remain under pressure from higher raw material prices and gasoline prices as well as the strong yen,” analyst Chizuko Satsukawa said.

Both the cost of steel and rubber, obviously key materials in manufacturing cars, are projected to surge this year, gnawing away at profits of not only Toyota, but also the rest of the industry. And the price of gasoline moving above $4 a gallon will likely cut into truck and car sales.

Toyota was trading at $90.25, down $1.94, or 2.10 percent, as of 2:09 PM EST.





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