Investment research firm Standard & Poor's has downgraded its credit rating for General Motors, saying bankruptcy is not a "far-fetched" option.
GM has launched a restructuring plan to save $2.5bn a year
Car giant GM has lost nearly $4bn (£2.2bn) this year as it contends with high staff costs, falling market share and a slump in sales of 4x4 vehicles.
The company recently announced it was closing 12 North American plants and cutting 30,000 jobs.
Its shares are down 40% in 2005, and slipped 2% in early Tuesday trading.
"In the past we might have felt at different points that the concerns about bankruptcy risk were way overplayed," a Standard & Poor's spokesman said in an analyst conference call.
"At this juncture, it's our conclusion that this isn't a far-fetched possibility if the kind of deterioration in results we've seen over the last few quarters should continue."
S&P has already downgraded GM's debt to below what is termed "investment grade" - the level which large companies are expected to retain and which guarantees a relatively low interest rate on borrowing.
On Monday, the ratings agency cut GM by two steps to "B" - five levels below investment grade - with a negative outlook, meaning that it expected it would have to cut it further within the next two years.