Analyst: Chrysler, not GM, in biggest danger

But rivals GM and Ford are likely to get through the rough patch and turn a profit in 2010.

JPMorgan auto analyst Himanshu Patel dismissed the possibility of an imminent bankruptcy at GM, saying in a conference call with investors and media that such fears "are completely overblown." The day before, GM shares slid to a 54-year low after Merrill Lynch auto analyst John Murphy wrote in a note to investors that a GM bankruptcy "is not impossible if the market continues to deteriorate and significant incremental capital is not raised."

GM shares rose 14 cents, or 1.4 percent, to close at $10.12 in abbreviated trading Thursday due to the Independence Day holiday.

Patel said the situation at Chrysler LLC is far more perilous because it has limited assets to raise cash and is more heavily reliant on trucks and on the North American market. Chrysler sales fell 22 percent in the first six months of this year.

Chrysler has had to release little financial information since the private-equity company Cerberus Capital Management LP bought it last year, but Patel estimated the automaker will burn through $4 billion this year and could be forced to file for bankruptcy protection or sell off parts of its business in the second half of 2009 if industry conditions don't improve.

Patel said it's difficult to predict the most likely outcome for Chrysler, but he said South Korean or Chinese automakers covet Chrysler's U.S. distribution network. A bankruptcy filing could be a hit to Cerberus, which invested $6.1 billion in Chrysler as part of its acquisition and also backed a $500 million line of credit that Chrysler tapped last month.

"These are untested waters," Patel said.

Chrysler spokesman David Elshoff declined to comment, but earlier this week, Chrysler President and Vice Chairman Tom LaSorda denied that Cerberus planned to sell Chrysler in pieces.

"Hogwash, absolutely not being considered at all," he said. "Absolutely no relevance. I don't even want to entertain those questions."