NEW YORK (AP) — Shares of General Motors Corp. and Ford Motor Co. plunged in the waning minutes of trading Thursday, after Standard & Poor's Ratings Services placed their credit ratings under review for possible downgrade.
S&P said the moves reflects the weakening automotive markets across the world and expectations that tight credit markets will make for a rocky road ahead.
GM shares plummeted $2.26, or 33 percent, to $4.65 before edging back up slightly to close at $4.76, helping drag the Dow Jones industrial average down by more than 600 points to their lowest level in five years.
Thursday's low point marked the Detroit-based automaker's lowest share price since March 15, 1950, according to the Center for Research in Security Prices at the University of Chicago.
Thursday also marked the GM's sixth straight day of losses. The automaker's shares are down 50 percent from their close of $9.45 at the end of September.
Meanwhile, Ford shares fell by as much as 63 cents, or 24 percent, to $2.03 late in the session before rebounding slightly to close at $2.08. The Dearborn, Mich.-based automaker's shares hadn't fallen that low since June 1, 1983, according to the Center for Research in Security Prices.
The center's historical prices are adjusted for splits and other changes.
The ratings being reviewed by S&P include the "B-" long-term corporate credit ratings for both Ford and GM, along with the "B-" long-term counterparty credit ratings for the two companies' respective financing arms, GMAC LLC and Ford Motor Credit Co. The ratings already indicate the companies' debt is below investment grade.
S&P said it believes both automakers have enough cash for at least the rest of 2008, but rapidly worsening industry conditions will make things tough for them in 2009.
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.
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