DETROIT ? An interesting occurrence happened after the world’s two largest automakers posted third-quarter earnings that beat Wall Street expectations.

They got dissed.

Standard & Poor’s almost immediately lowered its credit rating for No. 1 General Motors Corp. and said it was reviewing No. 2 Ford Motor Co.’s rating to see if it also should be cut.

UBS Warburg issued a research report last week that started, “General Motors: What’s all the excitement about?” The investment bank said GM clearly had warned Wall Street about its fourth-quarter prospects, and UBS cited the automaker’s massive pension fund liability as another major worry.

“Although conditions are OK now, they are likely not getting any better,” UBS said in the report.

The next day, Prudential Securities lowered its earnings estimates for the next couple of years at Ford, saying that despite the automaker’s better-than-expected results in the most recent quarter, “our outlook is not optimistic.”

While concerns about pension liabilities, the effect of buyer incentives on profits and long-term debt have battered auto stocks in recent weeks, analysts say a broader issue is causing a major drag the uncertain economic climate.

Also lurking: a possible U.S. attack on Iraq and its implications on fuel supplies and prices.

A Ford Taurus assembly line is shown at Ford's Chicago Assembly Plant. Analysts say Ford appears to be making progress in its effort to reduce costs and improve efficiency, but market share loss, price wars with GM and Chrysler and weak performance by its luxury brands continue to concern investors.

Partly because of the unclear picture, IRN Inc., a Grand Rapids, Mich.-based automotive forecasting and research firm, is among those predicting vehicle sales in the United States will decline slightly next year from an estimated 17 million in 2002.

“Most of us sense that recovery in the auto sector will take a bit of time,” said Alan Ackerman, of the brokerage house Fahnestock & Co. in New York. “Some of the restructuring that’s under way may take some time before people have a great deal of confidence in auto operations.”

Ford and GM also have specific internal issues to contend with.

Ford is in the 10th month of a revitalization plan that calls for the elimination of 35,000 jobs globally part of the company’s goal to improve profits by $9 billion by mid-decade.

Analysts say Ford appears to be progressing in its effort to reduce costs and improve efficiency, but market share loss, price wars with GM and Chrysler and weak performance by luxury brands such as Jaguar concern investors.

Aside from a hot-selling new car to give Ford’s lineup a boost, what chairman and chief executive Bill Ford needs most right now is time, industry observers say.

It’s been a year since Ford took over the Dearborn, Mich.-based company his great-grandfather founded 99 years ago, and he acknowledged last week the past 12 months have been brutal. Ford lost more than $5 billion last year.

“They’re doing the right things, but it’s a long-term plan,” said Greg Salchow of Raymond James & Associates in Detroit. “When you’re dealing with an organization and its practices, it just takes time.”

At GM, the focus isn’t so much on auto operations as it is on matters such as the company’s investment in crumbling Italian automaker Fiat and Hughes Electronics Corp.

Hughes, GM’s satellite television business whose proposed merger with EchoStar Communications was blocked this month by federal regulators, lost $81 million in the third quarter.

Ford and GM both face enormous pension liabilities because of slumping investment returns, but GM’s larger deficit was the primary reason S&P downgraded its credit rating.

Fitch Ratings said last week that auto-related companies in the United States, led by Ford and GM, likely will end their fiscal years with more than $30 billion in underfunded pensions. That’s up from $13.9 billion in 2001.

“The pension drag is one we have to take seriously,” GM chief financial officer John Devine told analysts and reporters last week. “We believe it’s manageable, but it’s going to take some number of years and some amount of cash to feed it.”