GM leads way into downward spiral as auto anxiety soars

Toyota Motor, Detroit automakers' chief rival, had a market cap of $148.8 billion at Thursday's close.

In his note to investors, Goldman auto analyst Patrick Archambault said he expects GM to burn through enough money in this period to cause "significant shareholder dilution and/or a cut to the company's dividend."

•Chrysler, privately owned, on Tuesday tapped a $2 billion line of credit, a move that ignited talk of a bankruptcy filing.

Chrysler said it had to use the line before August or lose it under terms of the contract that established the credit. Chrysler is 80.1% owned by private investment company Cerberus Capital Management. The rest is held by its former partner, German automaker Daimler.

"There is no basis for the rumor" of a bankruptcy filing, spokesman David Elshoff said Thursday.

Looking for signs of life

GM has given up on its original predictions that the industry will recover during the second half of this year. Now, investors are trying to figure out how much longer the downturn will last, says Tynan. "I think there's a realization that if this market stays weak through 2008 and 2009, there are going to be liquidity issues at General Motors and Ford," he says.

People are looking around, he says, for signs that things might get better, and not seeing any: "There's not a whole lot of upside catalyst."

GM ended the first quarter with $23.9 billion in cash and is likely to burn through about $6 billion of that this year. Without an end to the sales slump in sight, investors are worried, Tynan says.

"The industry can survive a 15-million-unit year," Tynan says. "But can it survive two?"

Contributing: Wire reports

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