A good reflection of the industry recovery, two of the three Detroit automakers just went up in Standard & Poor’s Ratings Services yesterday – GM went from stable to positive and Ford to investment grade.
Detroit automakers, just four years after GM and Chrysler Group LLC went through bankruptcy, are now reaping profits not seen since the turn of the century as U.S. auto sales went up 17% last month and reached their highest level since May 2007.
GM and Ford’s strong performance in their home market helped drive S&P’s decision to take positive actions on both. GM’s outlook is a sign the ratings company will probably boost the largest U.S. automaker to investment grade by the end of 2014. S&P increased Ford to BBB-, the last major ratings company to rate the carmaker investment grade.
“The North American performance has been much better than we would have anticipated,” said yesterday Dan Picciotto, S&P’s primary credit analyst on GM and Ford. “It’s hard to understate how much cost has been taken out of the North American operations before, during and after 2008 and 2009. They’re certainly in a much better cost position.”
Detroit’s reckoning and revival have the U.S. automakers growing like they haven’t in years. U.S. market share this year for GM, Ford and Chrysler improved to 45.4%, from 44.8% last year, excluding sales of Fiat-brand cars sold by Chrysler. The companies are on track to sell about 7 million cars and trucks in the U.S. this year.