GENERAL MOTORS has warned that it will run out of the cash necessary for its business to function in the first half of next year unless conditions improve or it can raise extra funds.

The world's biggest carmaker said its cash reserves had dipped to $16.2 billion (€12.7 billion) at the end of September, from $21 billion three months earlier.

This year it said that it needed a minimum of $11 billion-$14 billion to maintain normal working capital.

The company said it had identified ways of adding another $5 billion to its liquidity up to the end of 2009, in addition to $15 billion of cost-cutting announced this year.

Even with these plans, though, General Motors said liquidity would "fall significantly short" in the first half of 2009 of the minimum needed to run its business, unless conditions improved or it could raise funds from asset sales or the government.

Shares in GM fell 14 per cent to $4.14 on the news.

Ford Motor reported that it had burned through $7.7 billion of cash in the latest quarter, more than twice the rate in the first half of this year, and was cutting another 10 per cent of its US white-collar staff, fuelling concerns about the frailty of Detroit's big carmakers. Ford said it had automotive gross cash of $18.9 billion at the end of September, compared with $26.6 billion at the end of the second quarter.

Chrysler, the smallest of the Detroit companies, also suffered a blow when GM indicated that it had walked away from a possible acquisition that might have allowed both to cut costs.

Without mentioning Chrysler by name, GM said it had "recently explored the possibility of a strategic acquisition", but set this aside "to focus on its immediate liquidity challenges".

Bob Nardelli, Chrysler's chief executive, said: "We will continue to explore multiple strategic alliances or partnerships."

All three companies are seeking emergency financial support from the US government. Their chief executives met US lawmakers on Thursday.

Analysts said the frank remarks about their plight yesterday might have been calculated to improve their bailout chances.

Alan Mullally, Ford's chief executive, said that the company had discussed a possible government-backed loan in case "the economy continues to deteriorate substantially".