American Axle shares tumble on news of GM cuts

After a roller-coaster day of trading, American Axle shares closed down 21 cents, or 3.5 percent, at $5.80. Earlier in the day, the Detroit-based company's shares plunged 68 cents, or 11 percent, to $5.33, before climbing as high as $6.18 in afternoon trading.

The morning's low point passed American Axle's previous 52-week low set on Monday by 50 cents and marked the company's lowest share price in at least a decade.

The company's shares have taken a beating in recent months. American Axle shares are down about 69 percent since the beginning of this year and about 81 percent in the last 12 months.

Detroit-based GM, which accounts for about 80 percent of American Axle's total sales, said earlier Tuesday that it plans to cut its light truck production capacity by 300,000 units, 150,000 more than it announced in June.

The automaker also said it will lay off salaried workers, suspend its dividend and borrow $2 billion to $3 billion, as part of a plan to turn around its North American operations.

American Axle decline to comment specifically on the GM production cuts, but said it continues to restructure itself amid tough economic conditions.

American Axle "is proud to have GM as a strategic partner and looks forward to continuing to support GM's long-term product development activities, including the development of advanced driveline technology for numerous new global passenger car, crossover vehicle and light truck programs," the company said in a statement.

Automakers have slashed their production of sport utility vehicles and pickup trucks in recent months, as surging gas prices have driven customers away from the gas-guzzling vehicles and toward smaller, more fuel efficient, passenger cars.

The lower production is potentially disastrous for auto suppliers such as American Axle, which derives the vast majority of its revenue from the sales of light truck components.

Shares of other auto suppliers also tumbled to historic lows before rebounding later in the day.

Tenneco Inc., which makes emission and ride control products for the automakers, tumbled as much as $1.75, or 13 percent, to $11.47, before climbing back to close at $12.76.

The day's low easily passed the Lake Forest, Ill.-based company's previous 52-week record of $12.35 and marked its lowest share price since the fall of 2004.

Tenneco also said Monday that it would layoff 104 workers at a Canadian plant, citing previous GM production cuts announced in June. The Owen Sound, Ontario facility assembles shocks for a variety of GM small pickups and SUVs.

Meanwhile, Visteon Corp. fell 6 cents, or 2.8 percent, to close at $2.12, but earlier traded as low as $1.93, marking the first time its shares fell below the $2 mark since the company was spun off from Ford Motor Co. in 2000.