Oct. 9--U.S. auto stocks sank to historic lows Wednesday, as investor fears about credit availability and the weakening global economy combined to produce a stunning sell-off of Ford Motor Co., General Motors Corp. and dozens of other auto stocks.

"Everyone is bailing," Mark Warnsman, an automotive analyst for Calyon Securities and a former Ford executive, told the Free Press. "There is a crisis of confidence out there."

Ford shares lost 26 cents, or 8.9%, Wednesday to close at $2.66. They had traded as low as $2.15 earlier in the day.

GM shares fell 65 cents, or 8.6%, to close at $6.91.

Just four years ago, Ford shares traded in the mid-teens, GM shares were above $40 -- and investors complained about the deflated stock values.

The shares of several auto suppliers also fell, including Detroit-based American Axle & Manufacturing, whose shares closed at a historic low of $3.81.

The breathtaking devaluations by investors bring the market capitalization, or total stock-market value, for Detroit's two automakers to just under $10 billion -- combined. Ford is now worth $6.02 billion, and GM is worth $3.91 billion.

Toyota Motor Corp., by contrast, is worth almost $106 billion, although its stock value has fallen by more than 40% in the last year.

During the Automotive Hall of Fame induction ceremony Tuesday night, Jason Vines, a former spokesman for Ford and Chrysler, joked about how a share of Ford stock was cheaper than a gallon of gas or a cappuccino at Starbucks.

"Tomorrow, go out and buy some Ford stock, for God's sake," Vines, now Compuware's senior vice president and communications chief, recalled telling the crowd. "You're going to be rich."

'Everybody's in a panic'

A confluence of factors, shareholders and experts said, are responsible for the sell-off.

Aside from the acerbic U.S. economy, which the Conference Board predicts will further contract through the first half of 2009, fears that consumers cannot get auto loans to buy Detroit's cars and trucks seem to have reached a fever pitch.

"I think everybody's in a panic because nobody can get a loan to buy a car," John Wojdyla, a Ford shareholder in Royal Oak, who has decided to hold on to his shares, told the Free Press. "News reports that people can't get auto loans is a part of it."

Indeed, CNW Marketing Research in Bandon, Ore., reports that only 64% of consumers applying for auto loans so far this year have been approved, compared with 83% a year ago.

While the sharpest drop was in sub-prime auto loans, borrowers with good and great credit also are being approved less often and asked to contribute larger down payments toward new-vehicle purchases.

Part of that credit tightening is a result of the national banking meltdown, but part of it is also the likely consequence of four straight years of increased delinquencies in auto loans arranged through dealerships, according to the American Bankers Association.

Dealers say fear is exaggerated

But several car dealers, such as James Seavitt, owner of Village Ford in Dearborn, complained to the Free Press in recent days that there is now a growing perception in the market that virtually nobody can get financed for a new car or truck.

Several dealers said this fear is grossly exaggerated and causing an irrational drop-off in showroom traffic and confidence.

Russ Shelton, owner of Shelton Pontiac Buick GMC Inc. in Rochester Hills, told the Free Press on Friday that while lenders are being more careful, "GMAC is still alive and well, and there are still people buying cars."

Brenda Hines, a spokeswoman for Ford Credit, said the company is still busy approving car and truck loans. "We have not changed our lending practices in the last five years," she said.

However, AutoNation Inc., the nation's largest chain of car dealerships, maintains that the availability of auto loans has become a major problem in the market.

"Confidence is a big driver of consumer spending, and no one wants to say anything that might further erode consumer confidence," company spokesman Marc Cannon said.

Serious concerns about cash

Ford and GM stock have also been hurt by recent reports from Citigroup Global Markets and Fitch Ratings, which raise serious concerns about liquidity -- or available cash -- despite the federal government guarantee of $25 billion in loans for the industry.

On Monday, Fitch downgraded Ford and its credit arm by one notch because of increased risks.

Fitch said it projects that without additional capital or asset sales, "Ford's liquidity could decline to the minimum required level of $10 billion to $12 billion within the next 18 months."

On Tuesday, Citigroup analysts, led by Itay Michaeli, raised similar concerns about GM, which has outlined a $15-billion plan to raise money and cut costs.

"We continue to view mid-2009 as the deadline for GM to raise substantial external liquidity," Citigroup concluded.

The analysts' reports suggest that even more restructurings or government support might be needed, as weakness in the U.S. economy spreads to other parts of the globe.

Over the past few years, global operations have helped prop up Detroit's automakers and their money-losing North American business units.

But now, trouble lurks even abroad.

On Tuesday, GM reported that it will cut its European production by 40,000 vehicles by the end of the year. On Wednesday, Ford's Volvo Cars said it would slash 4,000 more jobs because of falling global demand.

The deeper the economic woes sink around the world, the longer it will take automakers to return to financial health.

"People might just be losing patience at this point," Warnsman said. "At the very least, it seems like the potential for recovery is stretching out in time."

Staff writers Brent Snavely and Jewel Gopwani contributed to this report.

-----

To see more of the Detroit Free Press, or to subscribe to the newspaper, go to http://www.freep.com

Copyright (c) 2008, Detroit Free Press

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

NYSE:F, NYSE:GM, NYSE:AXL, NYSE:TM, NASDAQ-NMS:SBUX, NASDAQ-NMS:CPWR, NYSE:AN, NYSE:C,