) to sell from neutral.
Analyst Ron Tadross says his downgrade was based on the lowering of a free-cash growth rate for the Big Three automakers to 0% from 2%. Increased foreign capacity in the high-margin truck market, most recently in Toyota pickups in Texas, should weigh on cash flow. In addition, GM's maturing truck product line, and restructuring at DaimlerChrysler and Ford, are driving elasticity of demand lower at GM.
Tadross thinks GM will have to cut its dividend over the medium term. He says GM's free-cash flow looks barely sufficient to fund growing pension and health care liabilities. He cut the $33 target to $28.