Goodyear credit rating cut to B+ as weak tire demand pressures leverage

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Goodyear credit rating cut

Highlights

Fitch downgraded Goodyear's Long-Term Issuer Default Ratings to B+ from BB- and cited global tire volumes down 4.7% in 2025 and 7.8% in H1 2026.
Goodyear's restructuring plan targets $1.0 billion in cost reductions and $2.0 billion from asset sales, but EBITDA margins declined and market headwinds persist.
Fitch projects leverage to exceed 5.5x by end-2026 from 4.1x in 2025, with higher oil prices and tariffs set to pressure margins and keep free cash flow negative through 2027.

Fitch cites weaker volumes and higher leverage

As reported by Fitch Ratings, the agency has downgraded the Long-Term Issuer Default Ratings of The Goodyear Tire & Rubber Company and Goodyear Europe B.V. to B+ from BB-. Fitch also cut Goodyear's senior unsecured notes to B+ with a Recovery Rating of RR4, while affirming the company's secured ABL revolver at BB+ and affirming Goodyear Europe's secured revolver at BB+ and its senior unsecured notes at BB-.

The stable outlook reflects Fitch's view that persistent pressure in tire markets and further cash restructuring costs keep key credit metrics below its previous downgrade sensitivities for an extended period. At the same time, the agency expects the ongoing restructuring work to support stronger metrics within several years.

Fitch says Goodyear's global tire volumes fell 4.7% in 2025 and 7.8% in the first half of 2026, contributing to revenue declines of $598 million in full-year 2025 and $587 million in the first half of 2026. The agency expects volumes to stabilize in the second half of 2026 and improve in 2027, although weaker macroeconomic conditions in Goodyear's core markets could keep demand soft in the medium term.

Restructuring gains offset by market headwinds

Goodyear's Forward plan, launched in 2023, targets roughly $1.0 billion in cost reductions and $300 million in benefits from changes to tire offerings, alongside more than $2.0 billion in gross proceeds from asset sales. The company has already sold its OTR and chemical businesses and the Dunlop brand, using proceeds to reduce debt while reporting cost savings ahead of original expectations.

Goodyear estimates cumulative global cost savings and North American pricing and product mix benefits through the end of 2026 will reach nearly $1.6 billion, while implementation cash costs remain below initial expectations. Even so, Fitch says EBITDA margin declines in 2025 and the first half of 2026 show that market conditions are still outweighing much of the operational progress.

Fitch expects leverage to rise to more than 5.5x at the end of 2026 from 4.1x at the end of 2025 as earnings remain under pressure. The agency also says higher oil prices linked to the Iran conflict are likely to weigh on second-half 2026 results, given oil's influence on about 70% of Goodyear's raw material costs, while tariffs continue to pressure margins and free cash flow is expected to remain negative through 2027.

In our earlier coverage of the IMF’s warning on the Middle East and Central Asia, we highlighted that a prolonged war and any renewed disruption to energy production or shipping routes could deliver uneven economic shocks across the region. The IMF projected a 2026 contraction followed by a rebound in 2027, while cautioning that limited buffers could amplify oil-price volatility and keep pressure on inflation and fiscal stability.

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