Moody's slapped $200 billion of debt issued by General Motors ( GM) and its subsidiaries with a downgrade Friday, citing the auto industry price war. The agency dropped General Motors' long-term rating to Baa1 from A3, General Motors Acceptance Corp.'s long-term rating to A3 from A2, and GMAC's short-term rating to Prime-2 from Prime-1. Its rating outlook for both GM and GMAC is negative. Moody's said North American competition and an underfunded pension will continue to restrain GM in 2003, making it difficult for the company to capitalize on any economic recovery. Still, Moody's noted, GM has a margin of safety due to its $20 billion gross liquidity position. "This cushion should provide the company with the flexibility to demonstrate ample evidence, over the next six to 12 months, that it will be able to address critical business challenges," Moody's said. It said those challenges were cost reductions, preserving product momentum, maintaining market share and keeping wage increases lower. GM closed at $37.12 Thursday, down a penny.