Fitch: No change for Asian automakers

Fitch Ratings said the recent labor unrest and resulting wage increases at suppliers of the Chinese operations of major Asian automakers will have minimal impact on the ratings of the automakers.

Although the recent worker unrest could result in higher labor costs for Asian automakers in China going forward, the potential increases will have little effect on the profitability and ratings of the automakers, as labor costs are estimated to account for only 1% to 2% of revenue in China, Fitch said.

In the past two months, strikes at suppliers for Honda Motor, which has A ratings and a stable view, Toyota Motor, which has A+ ratings on Ratings Watch negative, and Nissan Motor, which has BBB- ratings and a stable view, have resulted in production suspensions at the three automakers' facilities in China.

A more potentially longer term impact is that the recent spate of worker unrest may lead to a sustainable labor cost increase in China, given that wage levels are still considerably lower compared to other developed markets, while supply of low cost labor is shrinking, the agency said.

All major Asian automakers such as the top three Japanese makers and Korea's Hyundai Motor, which has BBB- ratings and a stable view, and Kia Motors, which has BBB- ratings and a stable view, have a significant manufacturing presence in China to benefit from the potential growth in the market as well as low labor costs.

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