Shares in General Motors crashed to their lowest level in 62 years yesterday after an analyst at Deutsche Bank said that they could be worth nothing at all within 12 months.

The company gave warning on Friday that it could run out of cash early next year, but Deutsche Bank said that this could happen as early as next month.

Rod Lache, the Deutsche analyst, cut his 12-month price target on GM to $0, bringing it down from $4, and issued a “sell” recommendation. GM’s shares slumped to $3.02 in early trading, their lowest level since 1946, although they edged up again to close at $3.30, down $1.06 on the day.

Mr Lache said: “Even if GM succeeds in averting a bankruptcy, we believe that the company’s future path is likely to be bankruptcy-like.”

Although the prospects for a government bailout are seen to have risen since Barack Obama won the US presidential election last week, investors said that such action would come at a significant cost to existing shareholders.

Barclays slashed its target price from $4 to $1 and recommended an “underweight” position, against its previous advice of “equal-weight”. It forecast that GM would end the year with $13.3 billion in cash and would fall below its stated minimum of between $11 billion and $14 billion early next year.

Yesterday GM announced production cuts in North America that would leave 5,500 workers, who are paid by the hour, idle. Such workers are technically laid off and paid federal unemployment benefits which are topped up with a General Motors-funded supplementary benefit. They also keep their health benefits.

The idling process allows car companies to halt production and stem oversupply and to cut staffing costs rapidly. In the event that factory lines are brought back into production, the company is required to call back the workers in a specific sequence.

On Friday the carmaker and Ford, its rival, sent fresh shockwaves through the market with third-quarter losses that were worse than expected. Both carmakers have been hit badly by dire sales at home and overseas.

GM lost $4.2 billion (£2.68 billion) at operating level in the third quarter, while Ford lost $2.98 billion and announced further job cuts. GM also revealed that merger talks with Chrysler, seen as a lifeline for both businesses, had been called off.

Adding to its growing list of woes, Delphi, GM’s biggest parts supplier, may not be able to emerge from bankruptcy protection, GM said in a regulatory filing yesterday.

On Friday GM said that it would run out of cash early next year unless the economy improved, which is seen as unlikely, or the company sold significant assets, which is also far from certain, or it obtained cash from the Government.

Last week the US Government turned down a request from GM for $10 billion to support a merger with Chrysler. It has also turned down requests from Ford and Chrysler for money beyond a $25 billion pot established to help green initiatives.

However, Mr Obama said that he was looking at policies to help the industry he described as “the backbone of American manufacturing”.

The implications of financial crisis in the big three US carmakers are huge. Last week analysts estimated that even if GM, Ford and Chrysler only halved output, 2.5 million jobs would be lost throughout the automotive industry and the Government would lose $100 billion in taxes.

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