Moody's downgraded Ford's credit rating to one notch above junk bond status Wednesday and warned that it could be further cut as the Detroit automaker struggles overseas and invests an estimated $11 billion on a turnaround plan.
The second-largest U.S. auto manufacturer is facing weakening profit margins in North America, a retrenching business in China, and losses in South America and Europe, at least some of which could continue to worsen, Moody's said in a research note.
The investments are necessary, but it will take several years before that translates to better performance, Moody's said.
"Success could be challenged by having to address the serious performance problems in multiple business units simultaneously," Moody's said, adding that it was keeping a negative outlook on its credit rating "primarily based on the difficult changes the automaker will have to make."
Moody's said the company's debt rating could be cut even further, to non-investment grade, by the middle of next year if it doesn't make "clear progress" on its turnaround plan.