Fitch Ratings has affirmed Ford Motor Company and its Ford Motor Credit captive finance subsidiary at ‘BBB-‘ and revised its rating outlook for both to ‘positive’ from ‘stable’.

“Ford’s ratings continue to be supported by the automaker’s strong liquidity position, relatively low leverage, and improved North American profitability,” Fitch said in a statement.

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“The revision of the rating outlook to positive from stable reflects Fitch’s expectation that over the intermediate term the company’s European profitability will continue to improve, automotive debt will continue to decline, and the geographical diversification of the company’s unit sales will continue to grow.

“In addition, the positive outlook reflects the significant improvement in the funded status of the company’s pension plans.

“Overall, Ford’s increasingly competitive product portfolio and lower cost structure have positioned the company to withstand the significant cyclical and secular pressures faced by the global auto industry.”

The ratings agency said it expects the company has sufficient financial flexibility to “maintain an investment-grade credit profile throughout a period of severe economic stress”.

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But it cautioned: “Although Ford’s financial position has improved significantly since the last downturn, the company continues to face numerous risks. Chief among these is the inherent cyclicality of the global auto market, which remains tied to global economic conditions. In particular, although the western European market appears to have stabilised, the recovery remains tenuous, and Fitch does not expect a return to pre-crisis levels in the near term.

“Geopolitical issues, such as the recent events in Ukraine, also pose a risk for Ford and other global automakers.”