Chrysler and GM ratings downgraded

"Cost-reduction efforts have been aggressive but have simply not been able to keep up with the pace of declining sales volumes," the firm said.

Chrysler has announced plans to eliminate as many as 25,000 employees and to cut four products but U.S. sales have fallen in the past few months to levels even lower than the automaker had forecast.

"Chrysler's liquidity remains adequate for the short term, but could reach minimum required levels in late 2009 if the market remains flat with 2008 levels," according to Fitch.

Fitch downgraded its credit rating on Chrysler to B-minus from B. The rating outlook is negative.

Chrysler has consistently said its finances are on target. "Despite the challenges, we are meeting or exceeding our financial targets," Ron Kolka, Chrysler chief financial officer, told workers in an e-mail Tuesday.

In the week, other credit ratings agencies warned that the Detroit Three all could see further downgrades.

Also on Wednesday, Fitch downgraded its rating to B- from B for General Motors Corp.

"The downgrade results from weak economic conditions, the dramatic shift to fuel efficient vehicles and the resulting cash drains at GM that are expected to persist at least through 2009," the firm said. Detroit Free Press