Investors dumped shares of both Ford Motor and General Motors on Tuesday, with GM hitting its lowest level since the Great Depression.
Ford Motor finished more than 17 percent lower a day after disclosing a public offering of 300 million shares of common stock that will help it fund its health care trust for retired autoworkers and their families.
Meanwhile, shares of General Motors plunged a little more than 20 percent to a 76-year low a day after a group of GM executives disclosed they had sold shares in the struggling automaker.
Ford, the only major U.S. automaker that has not accepted government aid, said late Monday it will use the proceeds of the offering for "general corporate purposes" including funding its Voluntary Employee Beneficiary Association, or VEBA, with cash instead of stock.
Dearborn, Mich.-based Ford owes $6.3 billion to its VEBA by the end of this year.
In March, United Auto Workers members approved a new contract that, besides freezing wages and cutting benefits, allows Ford to use stock to make payments to the retiree health care trust.
The public offering of common stock is a first for the 105-year-old Ford, which went public when the Ford Foundation liquidated its shares of the company in 1956. Since then, the number of shares has multiplied with employee stock options, stock splits and preferred stock offerings.
Shares of Ford have enjoyed a strong rally in recent months, with some investors saying it is well-positioned to recover once the vehicle market improves.
The company has also been picking up market share amid deeper problems at its crosstown competitors, Chrysler and General Motors.
Chrysler filed for bankruptcy protection earlier this month, while GM is working to restructure out of court but may also face bankruptcy. The companies have received billions in government loans, which Ford has not asked for.
Sales at Ford are down 40 percent for the first four months of the year. Industrywide sales are off 37 percent during the same period.
As part of the offering announced Monday, Ford is granting the underwriters a 30-day option to purchase up to 45 million additional shares.
Six GM executives, led by former GM Vice Chairman and product chief Bob Lutz, disclosed Monday they sold almost $315,000 in stock and liquidated their remaining direct holdings in the automaker.
GM is headed for either a bankruptcy filing or an out-of- court restructuring that would wipe out current stockholders by flooding the market with new shares to pay off creditors.
The automaker's stock could be worthless in a bankruptcy or worth less than 2 cents per share if it proceeds with its plans to issue shares to creditors led by the U.S. Treasury, the company has said.
- Reuters and AP contributed to this report.