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DETROIT, Nov 11 (Reuters) - General Motors Corp GM.N shares plummeted to a 65-year low on Tuesday, extending recent steep declines on concerns the automaker might run desperately short of cash by early next year.
The shares of other automakers and parts suppliers also declined across the board amid increasing concerns about whether the industry could survive a deep downturn in U.S. auto sales.
Credit analysts at JPMorgan said on Tuesday that GM has several options to improve liquidity, but added the No. 1 U.S. automaker’s short-term survival will require the help of the government, the company’s suppliers, or both.
While government aid would decrease the risk of a bankruptcy, analysts have warned any assistance would come at a significant cost to existing shareholders.
The White House said on Tuesday it was open to considering any proposals from Congress to accelerate loans to the ailing U.S. auto industry from the already-appropriated $25 billion package. [ID:nN11518037]
U.S. House Speaker Nancy Pelosi said she was confident Congress would act on emergency legislation for the auto industry next week. [ID:nN11530985]
GM’s shares closed down 13 percent, or 44 cents, at $2.92 on the New York Stock Exchange. The stock earlier dropped as much as 18 percent to $2.76, its lowest since 1943.
GM shares have lost nearly 40 percent since Friday when the company reported a deeper-than-expected third-quarter loss and said its cash burn rate had accelerated, as an extended slump in car sales raised questions about the future of the U.S. auto industry. [ID:nN07387774]
GM announced additional steps to increase liquidity, but said that, even with those moves, liquidity would be at or near the minimum needed to run its business through the rest of 2008 and would fall significantly short of the minimum needed during the first two quarters of next year.
Separately, GM said it scrapped plans for an announcement at the Los Angeles Auto Show next week. The company previously scrapped plans to unveil a new Cadillac CTS coupe and a Buick LaCrosse sedan at the show.
GM spokesman Scott Fosgard said the decision was made partly to save money and partly because it was felt any product announcements the automaker made would be lost in the coverage of its financial difficulties.
GM Vice Chairman Bob Lutz was scheduled to attend the LA show to make an announcement about the company’s development of the all-electric Chevrolet Volt.
The shares of Ford Motor Co F.N fell 6.7 percent, or 13 cents, to close at $1.80, while auto parts supplier Lear Corp LEA.N slumped 15.6 percent, or 26 cents, to $1.45. (Reporting by Soyoung Kim, editing by Matthew Lewis and Andre Grenon)
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