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.
