Toyota Drops 2% As Moody Sees Margins Under Pressure Through 2012

Shares of Toyota Motor (TM) are down $1.27, or 1.6%, at $76.80, after Moody’s analyst Tadashi Usui in Tokyo last night issued a report cutting the firm’s senior unsecured credit rating to Aa2 from Aa1 with a negative outlook.

“Product quality and recall challenges — largey centered in the U.S. — have created significant uncertainty over whether it can maintain the pricing power it has historically achieved over its rivals,” writes Usui.

“Such a situation — coupled with an expected sluggish recovery in global car sales in 2010 and persistent overcapacity in the industry — means a material risk that its operating profit margin will remain well below that appropriate for its rating level until 2012 at the earliest and possibly beyond.”