Ford and General Motors may be on the midst of some turnaround of North America, but Fitch Ratings predicted that the Michigan-based carmakers will continue draining their cash assets thru 2008 and in 2009 unless the vehicle market makes a good recovery.
Fitch says that General Motors is in real jeopardy of another downgraded ratings this year as the North American losses, plus restructuring prices continue to eat the automaker's liquidity. General Motors posted the loss of the first quarter of $3.25 billion, mainly due to the firm's GMAC mortgage arm.
So, while Ford's still losing capital, Fitch says that it's in a better position that General Motors and could see actually a ratings raise to stable.
"In the absence of a rebound in economic conditions and industry sales through 2009, both companies are likely to remain cash-flow negative during this period," Fitch told to Automotive News. "(GM) liquidity has been supported by numerous asset sales, but the lack of further asset sales could result in a downgrade of GM in 2008."
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