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DETROIT (Reuters) -- General Motors shares today fell to their lowest level since 1950 as concerns mounted that an industry decline that started in the United States was spreading and a leading forecaster warned global auto demand could "collapse" in 2009.

GM shares fell 31 percent to $4.76 -- driving its market capitalization to its lowest level since 1929, according to California-based Global Financial Data.

Shares of Ford Motor Co., which hit a quarter century low on Wednesday, shed nearly 22 percent to $2.08. Major auto parts makers declined as well.

GM's market cap stands at about $3.3 billion, compared with a market cap of about $4 billion in March 1929 before the stock market crash that preceded the Great Depression.

GM posted a $15.5 billion net loss in the second quarter and announced plans in July to cut costs by about $10 billion. The company has been restructuring in North America to meet increasing demand for more fuel-efficient vehicles.

An investment banker who declined to be identified attributed the share decline to elimination of short-selling restrictions on the shares that had put the equity value out of balance with bond and credit-default swaps values.

"It all has to rebalance now," the banker said.

The stock decline comes as influential industry forecasters J.D. Power and Associates and Global Insight lower auto sector expectations for 2008 and predict a slow recovery.

"While the global automotive industry is clearly experiencing a slowdown in 2008, the global market in 2009 may experience an outright collapse," said Jeff Schuster, J.D. Power's executive director of automotive forecasting, in a statement.

J.D. Power cut its 2008 U.S. light vehicle sales forecast to 13.6 million units and said it expects sales to fall to 13.2 million units in 2009. Global Insight on Wednesday cut its 2008 U.S. auto sales outlook and warned that a recovery toward more normal levels may not occur until 2013.

Citigroup also cut GM and Ford Motor Co. to "sell" ratings on Wednesday.