GM, Ford shares fall on grim auto outlook

General Motors (GM) shares plunged 31% on Thursday and Ford Motor tumbled 21% on reports that auto sales will hit recession levels this year and get worse in 2009. Global auto market may experience an absolute collapse in 2009 amid growing concerns around availability of credit and general economic stress, said JD Power. The outlook represents the most dire warning yet on the auto industry in the wake of the financial turmoil that has rocked consumer confidence and virtually shut the door for many consumers to finance vehicle purchases. In response, S&P put GM and Ford's debt ratings on CreditWatch with a negative outlook. However, shares of the two US auto majors rebounded on the last day of the week. GM said it was not considering bankruptcy. Separately, GM also decided to stop production for a short time at several European plants, as part of its effort to reduce capacity. Other carmakers are also cutting back in Europe as they adapt to a sharp drop in demand.