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Standard & Poor's Downgrades Renault To Junk Status

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Standard & Poor's Downgrades Renault To Junk Status

Standard & Poor's Ratings Service lowered its credit ratings on Renault SA by two notches into junk territory on expectations weak European auto demand this year will continue next year.

The two-notch downgrade to BB - two steps below investment grade, comes three months after S&P put the ratings at the brink of junk. The ratings outlook was changed to stable from negative Friday, reflecting S&P's view the French auto maker should be able to strengthen its credit profile after next year.

Renault has been cutting costs and aiming to strengthen its alliance with Nissan Motor Co. (NSANY) to weather the global downturn.

However, S&P said further downgrades or a change in outlook would be possible if Renault burns through a "significant amount" of cash this year or its debt grows. S&P said it views an upgrade or positive outlook revision as highly unlikely in the current environment.

S&P credit analyst Barbara Castellano said the downgrade reflects the rating firm's expectations for very low demand next year and concerns about government incentive programs this year to support the sector.

S&P said in April that while European government programs to revive demand in the ailing auto industry could provide some companies with short-term liquidity, that they could impede the industry's long-term growth. At the time the credit rating firm said the government funds failed to address the industry's structural problems such as overcapacity and a fixed-cost structure.

S&P said Friday Renault had been hurt by a "large increase in debt in 2008," leaving its credit quality weak, and that it expects its credit profile will worsen amid diminished demand forecasts for next year.

The French government's 15% ownership in the company, while contributing to the stable outlook, doesn't provide "any notches of enhancement" to Renault's ratings, S&P said.

-By Tess Stynes, Dow Jones Newswires; 201-938-2473; tess.stynes@dowjones.com

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Lucky you.

I guess a broken clock is right twice a day.

I wouldnt trust a french (or any european built car) EVER.

I drive Japanese now and doubt I would change back

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I drive Japanese now and doubt I would change back

Good on you. Theyre dangerous french cars. Sure they feel comfy, but first its the head gasket, then the brakes.

If it wasnt for patriotism the French/German/Italian car industry would have gone the same way as ours.

Cheap insurance is the only reason i got a renault (first car) NEVER again. German cars dont seem much better for all theyre reputation...

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I had a renault it was great

I hired one on holiday about 12 years ago. Pile of sh*t.

Maybe they have actually improved since then though.

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I hired one on holiday about 12 years ago. Pile of sh*t.

Maybe they have actually improved since then though.

Mine was an old Savvanah estate ran it to very hgh mileage and apart from a new radiator nothing ever went wrong with it

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Standard & Poor's Downgrades Renault To Junk Status

Come on, they're not that badly built. Must have got a POETS day special (Push Off Early Tomorrow's Saturday).

Although Peugeot's are miles better.

trashed_car.jpg

Downgraded.

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Not looking good for the car industry.

Will the all the French companies be forced to merge to survive?

Maybe, I wonder what they will call themselves, les miserables?

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iv had alot of cars. generally old ones. had 6 french cars. currently a xsara vts that i give total death to and apart from the brakes not up the pummeling i give them (going to get some uprated ones) the car keeps comming back for more. so did my first little clio 1.4 mk1 but iv had 2 german cars a mk3 golf driver and a newer shape (S) reg passat that have both been piles of shit! really unimpressive. at least if french goes wrong its relativly cheap to fix. if kraut goes wrong its much bigger money. only german id have is bmw other wise jap for reliability french for fun

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I had a Renault once.

It was a pile of sh1t.

Fair point, Renault have beeen junk status for decades, during boom times even sh1t floats, they should have gone bust years ago. Put Rovers and Vauxhalls in that box too along with Fiats and Peugeots!!.

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Guest redwine

Renault bought the Romanian car maker Dacia and are now selling what they call "logans" in france they tend to look like fiat tempras

there idea was to kill the second hand car market by selling a new car cheaper than a second hand car and it works but the problem is nobody wants to buy a Renault anymore afterall Dacia is Renault

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Got a funny feeling the New Vauxhall Astra is going to be MEGA. The 1.4 Turbo will kick out 140 ish BHP & 170 Flbs at low RPM..........If they have a DSG box to go with and a SHARP price............I winner.

Mike

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Got a funny feeling the New Vauxhall Astra is going to be MEGA. The 1.4 Turbo will kick out 140 ish BHP & 170 Flbs at low RPM..........If they have a DSG box to go with and a SHARP price............I winner.

Mike

The pics of the New Astra look good.

http://www.carpress.co.uk/img.ashx?w=465&a...ra-interior.jpg

http://www.carpress.co.uk/img.ashx?w=465&a...amp;i=astra.jpg

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