General Motors is believed to be considering emergency moves to boost its liquidity, including the sale of Saab, its stake in GMAC, the finance business, and the sale and leaseback of its headquarters in Detroit.

The car giant insisted yesterday that it was not considering bankruptcy, despite the heavy fall in its share price this week.

On Thursday, its shares closed below $5, a 58-year low, which pushed the company’s market value below its level in 1929. Late yesterday, Citigroup added to the concern over GM by revealing that it had cut its stake in GM from 5.5 per cent to 3.1 per cent.

GM could announce further production cutbacks as soon as next week in response to the weak car market and the lack of finance for those who want to buy new cars. This week it announced production cuts in Europe after other contractions in the United States in the summer.

Rick Wagoner, the chief executive, and his senior team are believed to be open to a wide range of measures to try to bring in more cash.

It is thought that the company could consider the sale of Saab in addition to Hummer, which already is for sale. GM could attempt to sell its 49 per cent stake in GMAC, the finance operation, which it believes has value because of its loan book. GMAC is 51 per cent owned by Cerberus, the venture capital group.

The sale and leaseback of GM’s headquarters is also being actively considered. Such a move would be hugely symbolic of the decline of the world’s biggest carmaker.

Many analysts believe that GM and Ford are too big for the US Government to allow them to fail and that the costs of voluntary bankruptcy for a car company are too big. The economic implications of the collapse of GM would be immense because of the wide spread of the company’s bonds and the uncertainty of how many credit default swaps have been bought against them.

GM has more than $11 billion (£6.5 billion) of institutional bonds on issue, nearly $8 billion in convertible debentures and other foreign currency debt and retail bonds.

Brian Bethune, an analyst with Global Economics, said: “If it went bankrupt, it would be a shock. We don’t know the extent of credit default swaps connected with the bonds.”

As the pressure on the big American carmakers built yesterday, Ford announced that its chief finance officer would leave at the start of next month after a 32-year career. Don Leclair will be replaced by Lewis Booth, who is in charge of the company’s US division.

Marc Pado, US market strategist for Cantor Fitzgerald, said: “The extended credit crisis is starting to surface with major companies.” On Thursday, Standard & Poor’s, the credit agency, moved to put GM’s debt on negative credit.

Mr Pado said: “The company’s bonds are already junk. This would pretty much eliminate the company’s borrowing options, which could bankrupt the company without government intervention.” Barclays Capital cut its target share price to $4 yesterday because of liquidity and sales fears.

Brian Johnson, a Barclays analyst, said that GM would have to raise $10.3 billion to maintain liquidity of $14 billion throughout next year.

A spokesman for GM said: “Clearly, we face unprecedented challenges related to uncertainty in the financial markets globally and weakening economic fundamentals in many key markets. Bankruptcy protection is not an option that GM is considering. Bankruptcy would not be in the interests of our employees, stockholders, suppliers or customers.”

GM shares fell as much as 16 per cent to $4 in early US trading, their lowest price since 1949, before recovering to close 13 cents up at $4.89 against a falling market. The GM spokesman also blamed the lifting of the short-selling ban for the hammering of the share price on Thursday, when it plunged 31 per cent.

The expectation of fresh asset sales comes after a GM restructuring in July on the back of a second-quarter loss of $15.5 billion. Then it looked to raise $15 billion through extra funds and sales.

JD Power and Associates, the influential automotive industry commentator, said on Thursday that car sales would be lower next year than last year and that the global market was at risk of “outright collapse”.

Ford’s share price has also been knocked badly, a move that has rekindled some market speculation that it could be forced to sell its Volvo marque.

Its shares fell to their lowest level since 1982. Ford also ruled out seeking bankruptcy yesterday.

Global giant

Founded: September 16, 1908, in Flint, Michigan
Based: Global headquarters is the Renaissance Centre, Detroit, Michigan. American manufacturing facilities in Ohio, Oklahoma, Michigan, Tennessee, Wisconsin, Oregon, Missouri, Pennsylvania and New York. European headquarters is in Zurich and its Australian base is in Melbourne. Majority shareholder in Daewoo, South Korea, and has partnerships with groups in Japan, Germany, France, China and Russia, among others
Employs: 266,000 people worldwide
Global presence: Is the ninth-largest publicly traded company in the world. Manufactures cars and trucks in 35 countries. Sales last year totalled 9.37 million vehicles
Brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling
Revenue: $181 billion (2007)

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