BMW, Ford Motor and Toyota were downgraded by Moody's Investors Service and their major European, U.S. and Japanese competitors were put under review for possible cuts as the coronavirus pandemic raises risks for automakers worldwide.
BMW, the European automaker with the best credit profile, was dropped one level to A2, while Ford’s rating fell to Ba2, another rung into junk.
Moody’s put General Motors under review along with Daimler, Jaguar Land Rover, PSA Group, Renault, Volkswagen, Volvo Cars and McLaren Holdings. In Japan, Toyota, Nissan and Honda were downgraded on Thursday.
The rapid spread of the outbreak, a deteriorating economic outlook, falling oil prices and asset price declines are "creating a severe and extensive credit shock," Moody's said in a statement. "The combined credit effects of these developments are unprecedented."
Automakers and their parts suppliers have halted factories on both sides of the Atlantic amid government measures to isolate populations and restrict travel. The wave of work stoppages occurred as the viral epicenter moved to Europe from China and intensified in the U.S., halting sales and rippling through supply chains.
Demand will drop "meaningfully" over the coming months, especially in Europe and North America, Moody's said. It anticipates global demand will shrink about 14 percent in 2020 and could slump by roughly a third in the second quarter.