Stock falls a further 10 per cent following downgrading
General Motors’ share price has fallen by nearly 10 per cent after Merrill Lynch downgraded its recommendation for the stock from “buy” to “underperform”.
It is the latest blow for the carmaker as its shares had already reached their lowest in half a century.
Last month Standard & Poor's put the “big three” – GM, Ford and Chrysler – on creditwatch with negative implications.
S&P did say, however, that it expected the automakers' liquidity to be adequate through to the end of 2008.
Like Ford and Chrysler, GM has in place a restructuring plan and a healthcare deal with unions that it hopes will result in substantial cost cuts from 2010.
US automotive sales have been hit across the board by economic difficulties and skyrocketing fuel prices.
High fuel prices have led many SUV drivers to downgrade to smaller vehicles, leading to a spike in sales of cars such as Mini.
Mini sold 26,400 units in the first half of the year in the US, a third higher than sales in January to June last year.
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General Motors Corp. shares tumbled to their lowest level in more than 70 years, pulled down by a drop in the broader markets and continued speculation about the future of the struggling automaker.
GM shares hit a low of $1.52 , before rebounding somewhat to close down 23 cents, or 11.5 percent, at $1.77. The low matched a record set on July 26, 1934, according to the Center for Research in Security Prices at the University of Chicago.
The Detroit-based automaker’s shares have been battered over the past year by worries about the viability of the U.S. auto industry and plunging sales stemming from the industry-wide drop in demand for new vehicles.
GM stock price were worth $3.50 just a month ago and $25.54 a year ago.
Good Luck GM.