Nissan saw its credit rating downgraded to junk status Tuesday by S&P Global Ratings, which projected lower than earlier projected earnings for the Japanese auto brand.
The credit-rating agency blamed continued supply-chain constraints for what it expects to be a year Nissan will spend trailing competitors.
The carmaker’s rating fell a notch from BBB- to BB+, below investment grade but stable because Nissan plans to stay on a conservative financial path.
"Performance at the company has been sluggish for more than three years," S&P Global said in a statement about the downgrade.
The agency forecasted Nissan sales will fall far short of its fiscal-year target of 5.4 million units, instead topping out at about 3.7 million.
S&P Global has a scheduled live webinar Thursday titled, “How Nissan Motor Became a Fallen Angel,” in which it will share its views on the carmaker’s electric-vehicle strategy and its alliance with Renault and Mitsubishi.
Still, it said it could bump Nissan’s rating back up if the company can make significant sales strides.
Nissan has fought to turn its profitability tide in the years since the arrest of its former chairman, Carlos Ghosn. It recently signed a new deal with partner Renault that puts the two brands on equal terms. Renault cut its stake in Nissan from 43% to 15%, moving about 28% of Nissan into a French trust and thereby evening the field between the two, a longtime desire of Nissan's leadership.
The Yokohama-based company is also focusing more intently on EV production to compete in an industrywide trend away from gas-powered models.
Originally posted on Auto Dealer Today