WORLD> America
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WORLD> America
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GM shares drop to 58-year low, global risks eyed
(Agencies)
Updated: 2008-10-10 13:48 The reports added pressure on US-based GM, Ford and Chrysler, which are deep into restructuring plans and looking for ways to conserve cash until sales rebound.
Analysts say that other automakers in the US market, led by Toyota Motor Corp, have deeper pockets to withstand the sales downturn. Toyota made an unprecedented interest-free loan offer on 11 vehicle models after posting a 32 percent drop in sales in September. The program may be extended, North American sales chief Jim Lentz said on Thursday. Of GM, Fitch Ratings managing director Mark Oline said: "There are heightened concerns that the economic conditions and the credit crisis will take a deepening cut out of volumes." GM has announced plans to try to increase liquidity by $15 billion through cost cuts, asset sales and new borrowing. GM spokeswoman Renee Rashid-Merem said the automaker remains focused on its liquidity plan and declined to comment on its stock price movements. An investment banker who declined to be named because he is not authorized to comment on the record attributed the share decline to elimination of short-selling restrictions on the shares that had put the equity value out of balance with bond and credit-default swaps values. "It all has to rebalance now," the banker said. Global Auto Outlook in Question Oline said GM's main difficulty was in the deteriorating domestic US market, but there was concern that a global downturn in demand could hit GM's international operations as well, particularly in Western Europe, Russia and China. "A further cut in volumes calls into question the adequacy of their liquidity and raises concerns about trade credits throughout the supply chain," he said. |
