General Motors Corp shares plunged to their lowest level since 1950, according to media reports Friday.
This happened as concerns was enhanced that the auto industry decline that started in the U.S. was spreading. Moreover, it was warned by a leading forecaster -- J.D. Power and Associates -- global auto demand could "collapse" in 2009.
GM shares fell as much as 33 percent to 4.65 dollars Thursday, driving its market capitalizataion to its lowest level since 1929, California-based Global Financial Data said.
At its low, GM's market capitalization stood at 2.6 billion dollars as against a market capitalization of about 4 billion dollars in March 1929 before the stock market crash that preceded the Great Depression.
J.D. Power and Associates, a forecaster used by many in the auto industry to plan out their own outlooks, warned that "no region was immune to financial turmoil," and the mature auto markets were hit more severely than the emerging ones.
GM's decline was one factor that contributed to a sharp slide in the Dow Jones Industrial Average which went down to below 8,600 Thursday on panic sell-off
Mirko Mikelic, a portfolio manager at Fifth Third Asset Management in Grand Rapids, Michigan, said sinking consumer confidence was probably the biggest reason for the decline in GM shares.
"Outside of the financial sector, there are issues with big ticket, discretionary consumer purchases like vehicles, so yes, auto stocks are absolutely among the most vulnerable," Mikelic said.
U.S. auto sales have fallen nearly 13 percent in the first nine months of 2008 expected to be the worst year for sales since the early 1990s.
However, some automakers in the U.S. market, led by Toyota Motor Corp, have "deeper pockets to withstand the sales downturn," according to industry analysts.
Toyota got an interest-free loan offer on 11 vehicle models after posting a 32 percent drop in sales in September.
Source:Xinhua/Agencies
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