General Motors lost almost a third of its market value on Thursday amid concerns about the carmaker’s ability to continue funding its operations in the face of the credit crunch and weakening sales.

The 100 year-old carmaker’s shares closed at $4.76, their lowest level since the early 1950s. They touched $40 a year ago.

Ford Motor also came under pressure, slumping by 22 per cent to $2.16.

Standard & Poor’s placed GM’s credit rating, already deep in junk territory, on review on Thursday for a further downgrade.

Bob Schulz, an S&P analyst, said that while GM had adequate liquidity for at least the rest of this year, “the accelerating deterioration in industry fundamentals will be a serious challenge to liquidity during 2009”.

Another analyst, who asked not to be identified, ascribed the selling pressure to “a realisation that the company has to fund its operations on a day-to-day basis, and it’s becoming increasingly difficult to do this”.

Michael Ward, analyst at Soleil Securities, also linked the latest tumble to Thursday’s lifting of the ban on short sales by the Securities and Exchange Commission.

GM said that it did not comment on its share price “as a matter of policy”.

GM is set to be overtaken by Toyota this year as the world’s biggest carmaker. It has bled about $1bn in cash each month so far this year, and the haemorrhaging is expected to continue well into 2009, if not longer. The carmaker’s cash reserves have dropped from $27.3bn last December to $21bn on June 30.

Concerns about the company have been compounded in recent weeks by weakness in some key overseas markets, such as western Europe, Russia and China, which had been expected to cushion losses from core North American operations.

GM disclosed on Thursday that its European sales fell 1.9 per cent in the first nine months of the year with a strong showing in eastern Europe offset by an 11 per cent slide in the west.

”We are facing an unprecedented set of economic challenges due to the global economic crisis,” Carl-Peter Forster, head of GM Europe, said. ”The credit crisis and inflation from surging oil and commodities prices have seriously hurt consumer confidence.”

GM set out a plan in July to bolster its liquidity by more than $15bn, based mostly on internal cost-cutting, but also including a suspension of the dividend, asset sales and delayed development of new pick-up trucks and sport-utility vehicles.

These actions assumed a drop in US light-vehicle sales to 14m units this year and next. But JD Power, a consultancy, said on Thursday, that it expected sales to fall to 13.2m this year.

Jeff Schuster, director of forecasting, added that “any truly pronounced recovery appears to be more than 18 months away.”