General Motors share prices have fallen to a new 23-year low on November 15, almost 46 percent this year, on news of a new incentive program that spread concerns about a possible bankruptcy filing at the world’s largest automaker. GM’s new “red-tag “sale and profit-eroding discounts, would allow U.S. customers to buy vehicles at the same price auto supplier employees pay.
Shares on the New York Stock Exchange, which have lost nearly $4 billion this year, fell $1.23 to $22.51, before closing at $22.61 in Thursday trading. Brian Ropp, T.Rowe Price analyst said, “Their cost structure isn’t changing. The new incentives are just bringing down the top line and killing margins which are already negative.”
October U.S. General Motors sales fell 23 percent without new incentives, after a summer employee discount program that attracted many potential buyers into the market earlier than anticipated.
The loss of U.S. market share to foreign rivals, high health care and commodities costs, stalled sales of big SUVs, and possible strike at a main parts supplier, have concerned Wall Street investors about a six to 12 month timeline before GM files to seek bankruptcy protection. At issue is the nearly $31 billion in debt related to GM automaking operations that ratings agencies already have downgraded to junk status, or below investment grade, according to a GM spokesperson.