General Motors (GM) shares fall to 18-year low

Shares of General Motors fell to an 18-year low after Toyota unveiled production plans for 2006, increasing fears that GM will be toppled by its Japanese rival as the world's largest automaker.

Toyota said it plans to make a record 9.06 million cars in 2006, just shy of the 9.15 million cars and trucks that some analysts expect GM to build next year.

Shares of GM were down 76 cents, or 3.6 per cent, at $20.29 on the New York Stock Exchange. The stock fell more than 5 per cent to $19.63 earlier in the day - its lowest point since 1987, after being adjusted for its spin-off of Delphi Corp in 1999.

Shares have plunged nearly 50 per cent this year.

GM does not provide sales or production forecasts on an annual basis, but some analysts said the current trend points to GM's inevitable tumble to second place for the first time in 70 years.

"Toyota will probably be the largest producer in the world at the end of 2006," said Richard Hilgert, auto analyst at Fitch Ratings, citing GM's slumping sales of large sport utility vehicles in the fuel-conscious market.

Burnham Securities analyst David Healy expects GM to produce 9.15 million vehicles in 2006, and expects Toyota to surpass GM as the world's largest automaker in 2007.

Toyota's production increase of 10 per cent comes at a time when GM is shrinking capacity by slashing 30,000 jobs and closing 12 facilities in North America.

The automaker has lost nearly $US4 billion ($A5.41 billion) this year as it struggles with high health-care and commodities costs, loss of US market share to foreign rivals and sinking sales of large SUVs, its long-time profit generators.

"Investors are reacting to the Toyota figures," Argus Research analyst Kevin Tynan said. "Although it shouldn't be any great surprise. ... We've been saying for a while that at the current pace, Toyota will surpass GM next year."

Tynan said at current gas prices the Japanese automaker would overtake GM by the end of 2006.

Tynan also said many investors may be cutting losses at the end of year to offset gains made in 2005.

To make matters worse at GM, a strike at bankrupt Delphi could shut down plants and force the automaker to burn through billions of dollars a week, analysts say.

GM is said to be considering offering Delphi workers buyout packages, which would add to the automaker's obligation of up to $US12 billion ($A16.23 billion) to former employees who were sent to Delphi after the spin-off.

But analysts say they would rather see GM pay for buyouts instead of facing a strike.

As part of its broader restructuring efforts, GM also negotiated a deal with its union that would save it $US1 billion ($A1.35 billion) a year in health-care costs.

Analysts have said the cost-cutting efforts are not enough to turn things around at the auto giant until it starts regaining market share.

GM has also said it plans to sell a controlling stake in its General Motors Acceptance Corp finance arm to restore investment-grade rating to the unit. But analysts have said a sale is not imminent.

"GMAC is definitely not going to be sold in 2005. So there's certainly going to be no news headline pop into the rest of this year. That's another reason investors are selling."