NEW YORK (CNNMoney.com) - A GM bankruptcy isn't a likely scenario, but the troubled automaker's credit could be downgraded further below "junk" status, a Standard & Poor's analyst said Tuesday.

The outlook remains negative for GM, and there are events that could further pressure the company, S&P auto credit analyst Robert Schulz said during a conference call.

Adverse developments in negotiations with bankrupt auto parts supplier Delphi could burden the company, as could a poor reception of the automaker's new product line, he said.

But these events wouldn't necessarily lead to a bankruptcy filing and "we don't see those sorts of things necessarily happening in the near term," Schulz said.

Shares of GM (down $0.44 to $20.93, Research) fell nearly 3 percent in midday trading in New York.

GM and Ford (Research) face a tough road ahead as they attempt to turn around their ailing operations this year, and both need to make significant progress with their turnaround plans in the next 18 months, before they engage in contract negotiations with the United Auto Workers in Fall 2007, Schulz said.

He also kept the possibility of a GM bankruptcy on the table. "There could be some improvement in '06, but if things don't get better, the company could choose to restructure," he said.

Both carmakers have seen their credit ratings cut deep into "junk status," and while each has said that they have enough cash to keep operating, their downgrades have raised bankruptcy concerns.

U.S. automakers are losing billions on their core automotive operations as they are hit by rising health-care costs for both active and retired employees. At the same time, they are steadily losing market share to foreign competitors.

GM lost $8.6 billion last year, its worst performance since 1992. The company has announced a cost-cutting plan to shut plants and cut 30,000 jobs to save $7 billion annually, but is seeking more concessions from its workers.

The world's largest automaker also faces paying up to $12 billion in contract obligations to workers at Delphi, its former parts unit, which filed for bankruptcy protection in October.

--------------

Click here for the latest auto news.