Moody's: Chrysler outlook negative

Moody's Investors Service said it affirmed the B3 corporate family and probability-of-default ratings of Chrysler LLC and changed the outlook to negative from stable.

The change in outlook reflects the increasingly challenging environment faced by Chrysler as the outlook for U.S. vehicle demand falls and as high fuel costs drive U.S. consumers away from light trucks and sport utility vehicles, the agency said.

During the month of May, Chrysler's overall share of the light vehicle market fell to 10.7% from 12.7% on a year-over-year basis and its share of the car segment fell to 5.7% from 8.8%. Moody's said that while the overall U.S. market demonstrated a car/truck mix of about 60/40, Chrysler's car/truck mix was about 32/68. Moreover, given the 2008 release of the new Dodge Ram pickup - a relatively high-volume and traditionally high-profit vehicle for Chrysler - the company's ability to contend with the ongoing shift in consumer demand will prove challenging, the agency predicted.

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