By Clare Matheson BBC News business reporter

The American love affair with SUVs seems to be coming to an end

This would mark the group's fifth quarterly drop in earnings and thus add to the ever-growing chorus of concern about the Detroit-based company.

The predictions come despite the group racking up its best worldwide sales - 9.2 million cars and trucks - since 1978 and a strict cost-cutting programme.

So how did 'The General' manage to get so far off course?

US car manufacturers have had a rough ride in recent years, battling shrinking market share, a consumer spending slowdown and rising fuel prices.

But the decline has proved to be good news for Asian rivals.

Asian drive

US consumers have been turning increasingly to their smaller, more fuel-efficient cars in the face of surging oil prices.

Such is the popularity and success of Asian brands that Toyota is expected to take over the number one spot from GM - with some experts expecting the development to take place this year.

[GM] took the double hit of employee discounts in June, July and August, then Katrina hit Rebecca Lindland, Global Insight

Commentators have also accused GM of failing to come up with original new designs, instead relying too much on gas guzzling trucks, or sports utility vehicles (SUVs), to boost sales.

"The big SUVs were oversold because of a few desperate domestic car companies. They were bound to decline, they milked that cow dry," says Strategic Vision analyst Dan Gorrell.

As well as losing market share - GM's US market share fell to 26.2% last year from 27.5% in 2004 - the group is also wobbling under a huge financial burden.

According to estimates, almost $2,000 of the cost of each new vehicle is currently ploughed into the healthcare costs of former workers.

Discount doldrums

Add to that the fact that the group has been squeezing its margins by slashing prices in the US in an effort to drive sales, and it is evident that GM is making little profit on vehicle sales.

GM has been offering generous discounts

"I think they're going to be down in the fourth quarter just because October's sales were so much weaker than expected," says Rebecca Lindland, analyst at Global Insight.

"They also took the double hit of employee discounts in June, July and August, then Katrina hit."

Hurricanes Katrina and Rita in September drove petrol prices higher and car sales down as consumer confidence faltered in the face of rising fuel bills.

Meanwhile, GM's debt burden has almost doubled after downgrades from credit rating agencies Moody's and Standard & Poor's which pushed the firm further into junk territory - junk status suggests a company is more likely to default on its debt.

Such bad news has prompted many experts to suggest that GM is not far from applying for Chapter 11 bankruptcy protection.

But chief executive Rick Wagoner has declared that tales of his company's demise are premature.

"We don't see bankruptcy as a winning strategy in any way, shape or form," he said earlier this month.

"It's not a good plan, and it is not constructive for there to be a lot of speculation about it. It doesn't help sales, and we don't have any intention of doing it."

Toyota challenge

Even rival Toyota is cautious about the future of GM, claiming bankruptcy could trigger a crash in US consumer confidence.

"We have no interest in GM declining, or in becoming number one," says Jim Press, president of Toyota Motor Sales USA.

"GM is a global icon, it supports the economy and represents the strength of the industry.

"We have great confidence they will emerge in a much stronger position."

GM's problems have left chief Rick Wagoner under pressure

GM is trying to relieve its problems somewhat by cutting 30,000 jobs and closing 12 US plants.

Further reductions could be unveiled by the firm along with its results.

"The cuts have to be enough, we don't see the sales declining past 2010, but we still see them losing 300,000 units in sales, which hints at factory closures," says Ms Lindland.

"That is unless they hit it big with crossovers (which combine the driveability of cars with the high ride of people carriers). There's not nearly enough production from a crossover point of view."

But she warns it could be some time before GM sees the benefits of new products, as it takes three to four years to get a product "from runway to showroom".

The group has also put its finance unit GMAC up for sale, a move that some analysts have suggested could raise as much as $15bn.

Profits at GM have been sustained in recent years only by the money it makes on loans to customers to buy vehicles, and on mortgages and insurance. GMAC made a profit of $378m in the second quarter of 2005.

But while the naysayers focus on the group's shrinking American market, GM is planning to focus on growing its presence in Europe and China.

Sales push

Last year GM became the biggest car producer in China, with business buoyed by demand for exports from developing countries such as Syria.

GM itself has said it expects 2006 to be "another record year for global auto industry sales...driven by growth in the Asia-Pacific region".

"In 2006, GM plans to take full advantage of its strong position in China."

Meanwhile, its Opel unit - based in Europe - was one of the few divisions to actually turn in a profit, a development GM is keen to make the most of.

All the new efficiency and productivity drives will take some time to kick in.