Fitch downgrades Ford, units

Fitch Ratings said it downgraded Ford Motor Co., Ford Credit Co. and their affiliates' issuer default rating and senior unsecured debt ratings to BB+ from BBB- and short-term debt to B from F2.

The outlook remains negative.

Fitch said the downgrade and outlook reflect the continuing share losses and competitive pressures at Ford's core North American automobile operations and the challenges the company faces in restoring sustainable positive cash flow. Ford, along with most of the North American auto industry, is in the midst of an extended and fundamental restructuring of its cost base, which will be necessary to stem operating losses.

The deterioration in Ford's core SUV products has had a disproportionate impact on consolidated profitability, with higher gas prices and shifts in consumer preferences providing uncertainty as to the extent of the decline going into 2006.

Ford has a number of competitive product offerings that should provide some support to consolidated volumes and revenues, but the company will nevertheless remain challenged to sustain revenues given price pressures and the trend toward lower-priced vehicles, the agency said. Inability to sustain revenues would further stress Ford's operating profile given the company's legacy costs.

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