The largest U.S. automaker says there is "substantial doubt" it can be a "going concern" unless it successfully completes a major restructuring.
General Motors says its restructuring plans count on government aid and concessions from workers. Auditors for the company tell regulators GM could be forced to file for bankruptcy unless the rescue plan is successful.
GM has already gotten more than $13 billion in loans from the U.S. government and says it needs billions more from the U.S. and European companies to stay in business.
Researchers and U.S. lawmakers have said the collapse could spark a series of failures in related industries.
Toyota, the world's largest automaker, has said a collapse would hurt all automakers. And Europe's second largest carmaker, Peugeot, has warned the collapse of the global auto industry is a real possibility.
Even as GM teeters on the brink of failure, the second biggest U.S. automaker is trying to position itself for a possible recovery.
Ford Motor Company announced plans to Wednesday to eliminate more than $10 billion in debt in a proposed deal with creditors. Industry analysts caution the deal may not go through. Ford is the only major U.S. car company that has not asked for government help.
The news from GM and Ford comes as the task force set up by U.S. President Barack Obama to salvage the country's auto industry continues fact-finding meetings.
Task force members, including U.S. Treasury Secretary Timothy Geithner and economic advisor Lawrence Summers, are set to meet with European automaker Fiat on Thursday and with officials with Toyota's U.S. division next week.
Fiat is involved in a proposed alliance with Chrysler. Toyota has asked the Japanese government for aid but says it has no plans to ask the U.S. for help.
Meanwhile, the chief executive officer of Japanese carmaker Nissan and France's Renault is calling on the European Union to take a more active role in rescuing the auto industry.
Carlos Ghosn tells the Financial Times
that the EU needs to be "faster" and "more decisive" given the deterioration of the global auto industry.
Some European countries, like France, have rushed to the aid of their car companies. But others, including Germany, have been hesitant to help.
Also Thursday, a global credit ratings agency, Moody's Investors Services, downgraded the credit rating for India's Tata Motors because of a "significant decline in sales."
The downgrade may make it more difficult for the Indian car company to borrow money.
Some information for this report was provided by Bloomberg and Reuters.