What happened

Shares of General Motors (GM -0.55%) were falling on Thursday, after the company reported a decline in first-quarter U.S. sales, and investors grappled with the growing possibility that GM will suspend its dividend.

As of 3 p.m. EDT today, shares were down about 6.5% from Wednesday's closing price.

So what

GM released its U.S. sales results on Wednesday, and they were about as expected. It said that sales fell 7% in the first quarter, after a solid start to the year was disrupted by COVID-19 in March. 

Sales of full-size Chevrolet Silverado and GMC Sierra 1500 pickups rose a combined 32% despite the disruption caused by the virus, but nearly all of the company's bread-and-butter crossover SUVs posted double-digit sales declines for the quarter. 

A Chevrolet Silverado HD pickup truck.

GM's full-size pickups sold well in the first quarter, despite the coronavirus. But sales of the company's crossover SUVs fell sharply. Image source: General Motors.

While GM didn't release month-by-month figures, auto industry research firm Ward's said that overall U.S. light-vehicle sales fell almost 27% in March from a year ago. 

GM's report wasn't surprising, but it hammered home the reality for auto investors: Sales are going to be down drastically for at least the next several weeks. 

That in turn has some investors worried about GM's dividend. While the company almost certainly has ample cash to ride out the pandemic and the recession that will likely follow, it's (sensibly) hoarding that cash because of the obvious uncertainties around that timeline. 

Rival Ford Motor Company (F -0.21%) suspended its quarterly dividend when it drew down its lines of credit on March 19. GM drew down its own credit lines on March 24, but it pointedly didn't cut its dividend at that time. 

Some auto investors took that as a sign of relative strength, which was probably GM's intent. But it may not be long before it has to cut its payouts as well.

Now what

Investors will have to wait a few weeks to hear more details about GM's situation and outlook from CEO Mary Barra and her team. The company is currently scheduled to report its first-quarter earnings before the market opens on May 6.