GM, Ford shares dive as investor worries mount
Shares of General Motors Corp (GM.N: Quote, Profile, Research) hit a 26-year low and Ford Motor Co (F.N: Quote, Profile, Research) also tumbled on Friday as investors reacted to disclosures from the leading U.S. automakers about the toll from a slumping auto market and from recent strikes against GM and one of its key suppliers.
Shares of GM dropped almost 5 percent to their lowest level since 1982 after the No. 1 U.S. automaker detailed the drag on its earnings from just-ended strikes at two of its own plants and at American Axle & Manufacturing Holdings.(AXL.N: Quote, Profile, Research)
Meanwhile, shares of Ford extended a two-day slump following Thursday’s announcement that the No. 2 U.S. automaker was slashing truck production and giving up on its goal of returning to profitability by 2009.
Ford shares were down 4 percent, hitting a six-week low. The stock has now lost 22 percent from its late-April high when it reported a surprise first-quarter profit. The decline has wiped out investor gains for the year.
GM shares have now lost 30 percent since the start of the year, touching a low of $17.38 on Friday — their lowest level since February 1982.
On Thursday, Ford surprised investors with a warning that its turnaround was stalling because of high gas prices and the related collapse in sales of trucks and SUVs, a segment Detroit automakers have dominated.
For GM, the latest bolt of bad news was the price of a three-month-old strike against American Axle by the United Auto Workers and local strikes at two of its own plants.
GM said on Friday the strikes had reduced its earnings by a total of $2.8 billion creditreport. That includes about $2 billion in lost earnings for the second quarter because of an unplanned cut in production of about 263,000 vehicles, including some 33,000 of GM’s better-selling sedans and crossovers.