By Soyoung Kim
DETROIT (Reuters) - Goldman Sachs suspended its rating on General Motors Corp
Goldman Sachs forecast the No.1 U.S. automaker will end 2008 with $12.5 billion in cash, within the $11 billion to $14 billion minimum range GM has said it needs to operate, requiring GM to look toward the government for aid.
GM's shares, which hit a 65-year low this week, slipped about 5 cents, or 1.6 percent, to $3.03, as the market awaited details on whether the U.S. government would push forward with a rescue plan for the auto industry.
Goldman Sachs said a new program to support the auto industry is most likely, though the timing was uncertain.
Also on Thursday, JPMorgan cut its GM rating to "neutral" from "overweight" and said the automaker needs "something immediately" to make it through the end of the year.
JPMorgan, which also slashed its target price for GM stock to $1.84 from $3.08, said a government bailout could easily reach $30 billion unless GM reforms its vast liability structure.
The warnings are the latest in a series of gloomy forecasts from Wall Street banks in the wake of GM's deeper-than-expected third-quarter loss and cash burn announced on Friday.
Analysts have warned that any government assistance, which they believe is a must for GM to survive through early 2009, would come at a significant cost to existing shareholders.
U.S. lawmakers have said in recent days they might support efforts to aid the struggling industry over and above $25 billion of low-interest loans previously approved to support capital investment to meet new fuel economy mandates.
Lawmakers will hold a hearing next week to consider a bill to provide another $25 billion in federal loans to U.S. auto manufacturers, possibly using part of the $700 billion financial market rescue law enacted last month.
But the White House said on Thursday it was not the intent of Congress to use the financial rescue package to help ailing U.S. automakers.
GM, Ford Motor Co
GM ended September with $16.2 billion in cash, down from $21 billion at the end of the second quarter.
(Editing by Maureen Bavdek)
© Reuters Limited. All Rights Reserved.
Reproduction or redistribution of Reuters content, including framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.
