GM Shares Tumble to 58-Year Low as Credit Ratings Under Review

General Motors (GM) shares fell more than 30% Thursday after Standard & Poor's Ratings Services said it's placing the automaker's credit ratings under review for possible downgrade.

S&P said Thursday that the move reflects the weakening automotive markets across the world and expectations that tight credit markets will make things tough for the near future.

GM shares fell $2.15, or 31%, to $4.76, helping drag the Dow Jones industrial average down by more than 600 points. That's the lowest price for GM shares since March 1950.

The ratings under review include GM's "B-" long-term corporate credit rating and its finance arm's "B-" long-term counterparty credit rating.

S&P says it believes GM has enough cash for at least the rest of 2008, but rapidly worsening industry conditions will make things tough in 2009.

Citigroup cut GM and Ford Motor (F) to "sell" ratings on Wednesday.

Thursday marked GM's fourth-straight day of losses. The automaker's shares are down about 35% from Friday's closing price of $9.

Analysts have voiced concerns in recent days that the ongoing slump in U.S. vehicle sales could last longer than they previously expected and could spread to other parts of the world, particularly Europe.

J.D. Power and Associates said Thursday that it now expects U.S. new vehicle sales to total 13.6 million units this year and 13.2 million in 2009.

The company had previously projected 2008 sales of 14.2 million units and 2009 sales of 14 million units. Last year, U.S. sales totaled 16.1 million units.

The company also forecast a slow down in vehicle sales growth in both China and India, along with a drop in European vehicle sales.

Ford Motor (F) shares also took a big hit Thursday, falling 58 cents, or 21.8%, to $2.08.

sold2early - 10/10/2008 8:52:49 AM

+1 Boost

Yeah lets go ahead and loan the Big 3 $25B. Like we'll ever get any of that back..

JWalkerLegrande - 10/10/2008 10:10:53 AM

+3 Boost

Guys you're talking about giving up the remains of the American industry. If this succeeds, the US will be the first country in the history that lives off tax breaks and complex financial products that nobody understands/needs. Welcome to the 3rd world !

MeanVulcan - 10/10/2008 10:45:20 AM

-1 Boost

Trying to bailout the big 3 is not only stupid, its ridiculous for so many reasons,
* they would use money to pay overhead rather than advancements in technology-- no payback
* the only thing they have proven to be good at is understanding exactly how to DECREASE ROI
* they have not proven to make competitive products (except the price competitive Corvette)
* they should have based their marketing philosophy on open market competition and not on isolationism

My most optimistic expectation is that GM and Ford will merge and focus on good quality family and small vehicles as well as alternative drive solutions... and HOPEFULLY, reconsider years and years of painfully ugly and boring designs.