Shares of struggling General Motors closed at their lowest level in nearly two decades as investors reacted to a strike threat at its largest auto parts supplier. After having dropped more than 30 percent in the past month, shares of the world's largest automaker closed down 5.8 percent at 21.29 dollars, up from a low of 20.90 in afternoon trading.
It was the weakest close since the crash of October 1987, said Art Hogan, an analyst at Jefferies, who said some investors are concerned that GM could follow its subsidiary, Delphi, into bankruptcy.
"They have the same issues in term of legacy costs," he told AFP. "If they had to follow the same path and file for bankruptcy as well, that would be a major issue."
A spokeswoman for GM downplayed those fears, and said the company had recently obtained major concessions from the union on health care costs.
The comments from the United Auto Workers "are related to Delphi," said spokeswoman Toni Simonetti.
The UAW said Wednesday that the "unprecedented" salary cuts proposed by Delphi could not be accepted by union members and warned that a strike was possible at GM's largest supplier.
"We have been subject to an unprecedented attack on our wages," the UAW said on its website. "Delphi's solution is to force its workers to near poverty-level wages while rewarding executives with 90 million dollars in bonuses."
A strike at Delphi could interrupt production at GM, a costly interruption at a time where GM can ill afford it.
GM has been struggling with a loss of profit and market share as consumers shy away from its gas-guzzling sport-utility vehicles. It lost 3.8 billion dollars in the first three quarter of 2005 and has seen sales drop by more than 20 percent in September and October.
