It has rusted through. You just don't see it all yet.
You have to take off the side skirts and cut out the affected portions and weld and shape new metal in place of it.
Or you could just take off the skirts and strip the area down completely and just absolutely coat it in a rust inhibitor (like Por-15), I'm talking thoroughly, everywhere. Total soaking of the whole area. Then prime and paint with multiple layers. If there's no holes visible you could just cover it up for a bit I guess.
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