GLOBAL AUTO OUTLOOK IN QUESTION

Oline said GM's main difficulty is in the deteriorating domestic U.S. market, but there is 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.

GM, the largest U.S.-based automaker, posted a $15.5 billion net loss in the second quarter and plans to increase production of more fuel-efficient cars in North America to adjust to dropping demand for pickups and SUVs.

Striking the right production balance between cars and trucks is hard. Credit Suisse believes GM and Ford may have to dial back on passenger car production in the coming months.

GM could be expected to update its liquidity plans when it posts third-quarter results. It has not said when it will report its earnings.

Analysts and auto executives cut U.S. light vehicle sales forecasts for 2008 and 2009 as high gas prices buffeted sales of large vehicles earlier in the year and the credit crunch further weighed on consumer confidence in recent weeks.

More recently, there have been signs of slowing in mature European markets and more moderate growth expectations for emerging markets where automakers had aimed resources.

GM, which posted a 1.9 percent sales decline in Europe through the first nine months of 2008, and Ford have relied, to some extent, on growth outside North America to support them as they restructure at home.

Influential industry forecasters J.D. Power and Global Insight have lowered expectations for 2008 U.S. light vehicle sales and predict a slow recovery. They also questioned sector growth in key regions overseas.

"While the global automotive industry is clearly experiencing a slowdown in 2008, the global market in 2009 may experience an outright collapse," said Jeff Schuster, J.D. Power's executive director of automotive forecasting.

In the U.S., J.D. Power expects 2009 industry sales of 13.2 million while Global Insight expects 13.4 million. U.S. auto sales were roughly 16.15 million units in 2007.

GM shares were off $1.36, or 19.7 percent, at $5.55 on the NYSE, while Ford shares were off 34 cents, or 12.8 percent, at $2.32. Ford stock had reached its lowest level in a quarter century on Wednesday, falling as low as $2.10.

(Additional reporting by Soyoung Kim in Detroit and Jui Chakravorty Das and Euan Rocha in New York; Editing by Brian Moss)

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