General Motors, the world's biggest carmaker, is considering thousands of job cuts in a radical restructuring of its North American business as it struggles with a dire domestic market.

It is facing increased fears over its financial stability, with Merrill Lynch warning that bankruptcy was “not impossible” if the company did not secure a cash injection of $15 billion (£7.6 billion) and if the home market weakened further.

GM responded by saying that it had enough capital for this year but that it would have to reconsider its position if sales worsened.

Executives are expected to discuss an urgent shake-up next month at a board meeting as they respond to falling sales in their heartland market. However, it is only the North American operations that are expected to be affected, with the carmaker's other divisions worldwide deemed to be faring adequately or well.

Last week GM suffered an 18 per cent drop in American sales for June, but its figures held up better than those of Ford, which plunged 28 per cent.

White-collar jobs are likely to be lost first, but production employees may also be cut back if GM scales back production in America.

GM has only recently completed a round of restructuring across nearly all its operations and last month announced that it was considering the sale of Hummer, its military-style sports utility vehicle, which has fallen victim to changing consumer tastes and the soaring price of fuel.

When Kirk Kerkorian, the activist investor, took a stake in GM two years ago and tried to force an alliance with Renault-Nissan, he wanted to sell the marque. In the first half of the year sales of Hummers have plunged by 40 per cent.

GM's other makes, such as Chevrolet, Cadillac and Buick, are thought to be safe because of their comparatively good performances.

If GM cuts capacity significantly, it will mark another symbolic shift in its international stature. Last year, it only just clung on to its position as the world's biggest carmaker and it may be overtaken this year by Toyota, of Japan.

Next month's GM board meeting will be looking to Fritz Henderson, the chief operating officer, for answers to the sharp downturn in the domestic market. Mr Henderson, a former chief financial officer, took over responsibility for GM's auto interests in April from Rick Wagoner, who remains at the head of the overall business.

GM reported sales growth in China yesterday, moving 12.7 per cent more vehicles in the fast-growing market in the first half of this year compared with the same period last year.

Recently Ford said that it was cutting 2,000 managerial positions.

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