Chrysler and General Motors have now received more than $20 billion in government loans to keep their operations afloat but a new study reveals automotive suppliers could require even more. Over the next four years auto suppliers could require a cash infusion as large as $33.5 billion.
According to a new A.T. Kearney Inc. study, auto suppliers will need between $17 billion and $33.5 billion over the next two to four years in order to avoid a high number of bankruptcies. Suppliers have been hammered by the collapse of new car sales, with many already teetering on the brink of bankruptcy.
The U.S. government has so far issued $5 billion in loans for the supplier industry, but much of that has yet to reach the intended parties – thanks in large part to government red tape.
According to Automotive News, six Tier 1 suppliers have already filed for bankruptcy in 2009, not far off from 2008’s overall total of eight. More bankruptcies are likely if the government doesn’t step in.
However, among all the gloom and doom, A.T. Kearney’s report did have some good news. The Chicago-based firm expects U.S. sales to once again top the 16 million unit mark, although not until 2012. Hopefully enough suppliers will be able to survive the current economic downturn to support the forthcoming uptick in sales.
05/14, 12:13 PM
posted by:
Borat
What a crock of crap. Have anyone lately looked on “Made in…” sign of their parts package? Most of it made in So. America (including Mexico) and in Asia. Packaging and shipping charges should not be that high.
05/14, 12:21 PM
posted by:
eal2009
This is bad news for every automaker that makes cars in N America. GM, Ford, Toyota, Honda, etc,
They all get their parts from the same suppliers.
If the suppliers get our money, they should be required to make those parts in the USA.
05/14, 1:16 PM
posted by:
Impulsive
This is a good one … there’s no blaming GM or Chrysler for this. An overinflated market which should never have gone to the size it did has now burst and EVERYONE suffers. Everything reverts to the mean eventually.
But, sure, let EVERYONE go bankrupt and start from scratch … right, fools?
05/14, 1:33 PM
posted by:
shaver
We all foresaw this. The automakers beat these guys down to little margins, most were not that strong to begin with. When the volume got turned down the $ #s no longer work. Where has all the money gone?
05/14, 1:51 PM
posted by:
Borat
Most of those companies were spawn off by very same automakers. AC Delco was GM subsidiary for many years, Mopar – Chrysler, list goes on.
05/14, 2:16 PM
posted by:
HoosierHero
Didn’t approve of the Big 3 (or 2) bailout and definitely don’t approve of the suppliers. When will it end? I need money to BUY an auto. They jacked up prices while putting out inferior products. Do I get a bailout too?
05/14, 2:35 PM
posted by:
lyndon_h
Let them all fail! That would be much better right? I wonder what the cost in unemployment paid, higher crime/prison rates because of unemployment, and increased forclosures will be until these people are absorbed into the job market will be.
05/14, 2:44 PM
posted by:
JakeK66
@lyndon_h
You can keep throwing money at problems, but sometimes there’s no money left to throw. I’d rather these companies go under than the US government. Like you said, they will be absorbed into the market eventually – new businesses will be created, and so on. Life goes on.
05/14, 2:45 PM
posted by:
Borat
Lyndon, you are absolutely right. Karl Marx, Lenin, Stalin, Hitler, Fidel & Raul Castro all were trying to solve those problems in exactly the same way.
05/14, 3:09 PM
posted by:
The Tuga
why do they insist on calling it “loans”
05/14, 3:45 PM
posted by:
Borat
How would you like us to call it? Crapped away fortunes? Pissed away cash? Mortgaged children?
05/15, 2:14 AM
posted by:
jdasch1
Bailout Nation- when will the government say NO. keep those credit lines open with the Chinese please. What a joke this new administration is doing. When will the bailouts stop?? When the money runs out?? We are above 10 trillion now and climbing. Buy gold.