Credit rating agency Standard & Poor’s (S&P) has upgraded GM’s credit rating in response to the company’s four-year-labour deal concluded with the UAW.
S&P said it was upgrading GM’s corporate credit rating to “BB+” from “BB-,” and it revised GM’s outlook for future ratings to stable from positive.
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S&P said the contract “will allow for continued profitability and cash generation in North America. GM has a two-year track record of profits and cash flow generation in its global automotive operations, supported by strong performance in North America.”
The ratings agency said it expects “to raise our rating on Ford to ‘BB+’ and assign a stable outlook if Ford’s US labour negotiations are resolved and ratified, and the outcome does not place Ford at a significant disadvantage relative to” GM’s labour deal.
GM chief financial officer Dan Ammann said GM’s breakeven point in North America remains unchanged as a result of the labor deal.
“We are pleased that S&P has recognized the progress we are making. Our fortress balance sheet and low breakeven point are helping us succeed even in uncertain economic times, so we can stay focused on building great products and driving profitable growth around the world,” Ammann said in a statement.
S&P noted some concerns, including commodity prices and other cost increases, as well as future production volatility.
“As the inventories of the Japanese automakers recover, we believe that some modest market share losses by many non-Japanese automakers could occur in the U.S. over the coming quarters,” S&P said.
