Moody's: Ford better but faces challenges

Moody's Investors Service said that the performance of Ford Motor Co.'s global automotive operations for the second quarter of 2007 was significantly stronger than the previous year and better than street expectations.

But the company continues to face significant competitive and financial challenges, and the rating agency said it expects that Ford's credit metrics and rate of cash consumption will likely remain consistent with no higher than a B3 corporate family rating level into 2008.

Ford's corporate family rating is currently a B3 with a negative outlook. The rating is pressured by the shift in consumer preference from high margin trucks and sports utility vehicles, and by the need for a new 2007 United Auto Workers contract that provides meaningful relief from high health care costs and burdensome work rules, Moody's said.

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