Aftermarket

S&P's Downgrades Automotive Suppliers

November 13, 2008

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A number of automotive suppliers, including several that also supply the commercial truck industry, had their credit ratings placed on CreditWatch by Standard & Poor's Ratings Services because of their ties to struggling American automakers.


S&P targeted ArvinMeritor, BorgWarner, Federal-Mogul, Goodyear and others because of their dependence on GM, Ford and Chrysler. The credit ratings agency also cut its long-term corporate credit ratings on Dana Holding Corp.

"We believe certain companies would be able to withstand the liquidity shock of a sudden bankruptcy filing by one or more of the manufacturers, but they may not be able to do so and remain at current rating levels," S&P said. "Given the potential for immense structural and near-term changes to the industry, we would likely resolve the CreditWatch listings as we receive more information on potential U.S. government assistance to the automakers, or lack thereof."

Goodyear issued a statement saying it was disappointed in S&P's action. "There are fundamental differences between our business and the companies whose businesses are heavily tied to the Michigan-based auto manufacturers," said Darren R. Wells, Goodyear's executive vice president and chief financial officer.

"Of approximately $20 billion in total sales in 2007, less than 8 percent was with the global operations of the three Michigan-based automakers. This number will be lower given weak OE volumes in 2008. Our OE customers are important to us, but more than 80 percent of our sales are to the replacement market for consumers who already have vehicles."

Wells said the near-term impact of financial challenges among the Michigan-based automakers is not expected to be material to Goodyear's liquidity.

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