Ford, GM Shares Slide on Credit Concerns

Updated from 2:27 p.m. EDT

Shares of Ford (F Quote - Cramer on F - Stock Picks) and General Motors (GM Quote - Cramer on GM - Stock Picks) saw losses accelerate Friday after Standard & Poor's placed the automakers' corporate credit ratings on CreditWatch negative.

S&P Ratings analysts said they would need to evaluate the financial damage being inflicted by deteriorating U.S. industry conditions, largely as a result of high gasoline prices. S&P also placed the automakers' finance units, Ford Motor Credit and GM's 49%-owned finance affiliate GMAC, as well as Chrysler and DaimlerChrysler Financial Services Americas on CreditWatch negative.

"We have renewed concerns about all three automakers' future cash outflows in light of the prospects for U.S. sales for the rest of 2008 and into 2009," said Standard & Poor's credit analyst Robert Schulz. The firm said it also believes deteriorating industry fundamentals could reduce liquidity to undesirable levels by the second half of 2009.

Moody's also changed its ratings outlook for Ford and Ford Credit to negative from stable, citing "parent level concerns and deteriorating asset quality."

Earlier Friday, Ford said it is making further reductions to its North American truck production plan as the company responds to the continued deterioration in the U.S. business environment and the accelerated shift away from large trucks and SUVs. Ford said 2008 pre-tax automotive results will be worse than 2007 and, unless the economy rebounds, it will be difficult for Ford to break even companywide on a pre-tax basis in 2009, excluding special items.

Cramer: GM and Ford Are Lemons

Additionally, Ford announced the delay of this fall's launch of the F-150 pickup by two months in order to clear existing inventory. Shares of Ford were falling 56 cents, or 8.9%, to $5.76. GM, meanwhile, was falling 94 cents, or 6.4%, to $13.85.

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