GM shares hit 65-year low

Detroit - Shares of General Motors Corp plummeted 15% to a 65-year low on Tuesday, extending recent steep declines on lingering concerns that the automaker's cash holdings might fall below the necessary minimum during the first quarter.

Shares of other automakers and parts suppliers also declined across the board amid increasing concerns over whether the industry could survive a deep downturn in US auto sales.

Credit analysts at JPMorgan said on Tuesday GM has several options to improve liquidity, but added that 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 that 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 US auto industry from the already-appropriated $25bn package.

GM's shares were down 15 percent, or 51 cents, at $2.85 on the New York Stock Exchange. The stock earlier dropped as much as 18% to $2.76, its lowest level since 1943.

GM shares have lost nearly 40% 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 US auto industry.

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.

- Reuters