Jim Hackett, president and chief executive officer of Ford Motor Co., center, speaks to members of the media at an event during the 2018 North American International Auto Show (NAIAS) in Detroit, Jan. 14, 2018.

Moody's said the company's debt rating could be cut even further, to non-investment grade, by the middle of next year if it doesn't make "clear progress" on its turnaround plan.

"Success could be challenged by having to address the serious performance problems in multiple business units simultaneously," Moody's said, adding that it was keeping a negative outlook on its credit rating "primarily based on the difficult changes the automaker will have to make."

The investments are necessary, but it will take several years before that translates to better performance, Moody's said.

The second-largest U.S. auto manufacturer is facing weakening profit margins in North America, a retrenching business in China, and losses in South America and Europe, at least some of which could continue to worsen, Moody's said in a research note.

Moody's downgraded Ford 's credit rating to one notch above junk bond status Wednesday and warned that it could be further cut as the Detroit automaker struggles overseas and invests an estimated $11 billion on a turnaround plan.

Since CEO Jim Hackett took the reins in 2017, investors have at times shown impatience with what they have said is a lack of clarity on how Ford will improve its businesses and bolster its share price. At the same time Ford under Hackett has made some bold moves, such as choosing to all but stop making traditional passenger cars for the U.S. market.

China is a particular concern in the near term, the report said. Ford has to retake lost market share while competing with a growing swarm of both Chinese automakers and other foreign firms.

Ford's plan to improve what Hackett has called its "operational fitness" could entail $11 billion in charges, including $7 billion in cash expenditures over the next three to five years. Moody's said Ford's decision to leave the North American car business is a positive for Ford's credit, since it reflects Ford's willingness to make aggressive and disciplined choices about where it puts capital, the report said. But it will take years to see the benefits of the plan.

"What we are looking for is very identifiable progress that the components of the company's restructuring and fitness plan are taking hold and yielding results," said Bruce Clark, senior vice president of Moody's corporate finance group.

Despite Ford's challenges, it has a lot of strengths. The company is competitive and profitable in North America, and the automaker's fitness plan is tackling areas where it is weakest. Ford has also chosen to rework its business while auto sales are still healthy.

"Since coming through the Great Recession, Ford Motor Company has delivered year after year of solid financial results and operating cash flows," Ford said in a statement. "The company has a strong balance sheet, which provides financial flexibility. We know we can capitalize on our strengths, bolster underperforming products and regions and disposition where we cannot make an appropriate return."