S&P takes the axe to its auto ratings

Standard & Poor's is taking the axe to its credit ratings for the major automobile manufacturers. GM, Ford Motor, and Chrysler were cut to B- from B. GM and Ford were removed from CreditWatch with negative implications as part of this move. A rating of B- is six steps below the investment grade threshold.

S&P said the following in its announcement of the action:

"We believe sharply lower U.S. light-vehicle demand and the recent dramatic shift in demand away from large pickup trucks and SUVs amid higher gas prices will complicate the turnaround efforts of all three automakers and reduce their currently adequate liquidity considerably over the next year and a half," said Standard & Poor's credit analyst Robert Schulz. "This will leave them more vulnerable to already adverse industry, economic, and credit market conditions." The greatest threats to the ratings over the next 18 months are the depth of economic weakness and the extent of the demand shift away from light trucks in the U.S.