May 27 (Bloomberg) -- General Motors Corp. fell to the lowest since 1982 after Citigroup Inc. cut its rating on the world's largest automaker to ``hold'' from ``buy,'' citing ``cash-burn risks'' as raw-materials costs rise.

``Auto fundamentals are poised to deteriorate beyond 2008,'' Citigroup analysts including Itay Michaeli wrote in a note today.

Instead of Detroit-based GM, investors should buy American Axle & Manufacturing Holdings Inc., which has better liquidity, more opportunities for new business and higher possible labor savings under its new labor contract, Michaeli wrote. He raised his rating on the supplier to ``buy'' from ``hold.''

GM's decline extended a slide that reached 30 percent this year. The shares dropped 18 cents, or 1 percent, to $17.42 at 4:02 p.m. in New York Stock Exchange composite trading, the lowest price since October 1982.

American Axle gained 59 cents, or 3.2 percent, to $19.03. The Detroit-based partsmaker, a former GM unit, rose 2.2 percent this year. It settled a three-month strike last week.

GM remains an ``appealing long-term restructuring story,'' though any stock gains may be limited by a ``drag on earnings'' from lender GMAC LLC and auto-parts supplier Delphi Corp., Citigroup said.

Delphi is working to find financial backing to emerge from bankruptcy and GMAC, 49 percent owned by GM, said it may not post a profit until next year.

8-Year Slide

GM's shares are trading at less than a quarter of their value since the day before Rick Wagoner became chief executive officer on June 1, 2000, and fell for a fifth straight day.

Further weighing on GM's profit is U.S. buyers' shift from large sport-utility vehicles and pickups to smaller SUVs and cars, Michaeli said. A midsized crossover SUV such as the GMC Acadia generates about $4,700 in profit compared with $6,800 for the full-size Chevrolet Tahoe, according to Citigroup.

GM's large-SUV sales fell 29 percent this year, and pickup sales are down 19 percent, according to Autodata. Large pickups and SUVs may be only 17 percent of North American auto output by 2010, compared with 21 percent in 2007, Citigroup said.

The automaker's bid to return to profit after three straight annual losses was dealt a blow by the walkout at American Axle and strikes at GM assembly plants that will cut 2008 pretax earnings by almost $2.8 billion.

The American Axle strike slashed output of large GM pickups and sport-utility vehicles by 330,000 units. United Auto Workers walkouts at GM factories in Kansas and Michigan cost $200 million in pretax earnings and 33,000 units of lost production of hot-selling Chevrolet Malibu sedans and Buick Enclave SUVs.

Industrywide U.S. auto sales may drop to 14.7 million units this year, the lowest since 1993, according to Ford Motor Co. GM's sales in its largest market fell 12 percent to 1.06 million units through April 30, compared with a 7.7 percent decline industrywide.

To contact the reporters on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net; Jeff Kearns in New York at jkearns3@bloomberg.net.

Last Updated: May 27, 2008 16:30 EDT