President Obama’s auto task force has denied a request from U.S. parts suppliers for up to $10 billion in loan guarantees. U.S.-based suppliers were seeking between $8 billion and $10 billion to ensure uninterrupted production once Chrysler and General Motors fully emerge from Chapter 11 bankruptcy.
The U.S. Treasury Department has already allocated $5 billion in aid to the country’s parts suppliers, which it feels is sufficient. Task force head Ron Bloom also noted that the billions given to Chrysler and GM will eventually trickle down to parts suppliers.
Suppliers contend they need more loans to offset the dramatic drop off in U.S. production. New car sales have fallen nearly 40 percent this year, with bankruptcies at Chrysler and General Motors great reducing U.S. output. However, President Obama’s auto task force believes the restructuring of the industry is going smoothly and has therefore ruled out additional loans.
“They said the role of the task force is not to prevent bankruptcies,” Neil De Koker, president of parts trade group Original Equipment Manufacturers Association, told Automotive News.
De Koker added suppliers will continue to press the auto task force but will also seek out loans from private banks.
