(Adds background, paragraphs 4-7)
NEW YORK, Nov 14 (Reuters) - Fitch Ratings on Friday affirmed its ratings on Ford Motor Co. , its finance arm and related entities but said the outlook remains "negative" as competition continues to affect pricing and margins.
Fitch affirmed Ford and Ford Motor Credit Co.'s senior long-term debt ratings of "BBB-plus," the third-lowest investment grade, and a commercial paper rating of "F2."
"This affirmation reflects Ford's very high level of liquidity, offset by relentless competitive pressures which continue to affect pricing and margins," Fitch said in a release.
Fitch's ratings on Ford and its finance arm are two notches above the Standard & Poor's ratings. On Wednesday, S&P downgraded both entities to "BBB-minus," just one notch above junk, from "BBB."
Moody's Investors Service rates Ford's debt "Baa1," roughly equivalent to Fitch's rating, while it rates Ford Motor Credit one notch higher at "A3."
"Despite $3 billion in cost reductions in 2003, automotive margins showed virtually no improvement due to competitive pressures and weak economic conditions that impacted pricing, as opposed to volumes," Fitch said.
Next year will be critical for Ford's recovery as it introduces products under a revitalization plan and as cost reductions continue, Fitch added.
Ratings remain strongly influenced by the company's liquidity, which includes almost $27 billion of cash on hand at Ford Motor and $20 billion at Ford Motor Credit, Fitch said.