Daily Auto News More Auto Industry Bankruptcies Expected as Government Denies Aid
Daily Auto News
Another round of bankruptcies may soon rock the auto industry – this time, involving the companies that supply major automakers with parts.
The AP reports, “The Obama administration has turned down a request by auto suppliers for up to $10 billion in additional federal aid to help the parts companies deal with the bankruptcies of General Motors and Chrysler.” An industry group had requested $8 billion in loan guarantees from the Treasury department. The administration’s auto’s task force reportedly “told industry leaders they had already provided plenty of support but didn’t see the need for further action.”
Neil De Koker, CEO of the Original Equipment Suppliers Association, told CNN
that “widespread bankruptcies throughout the sector would likely result” from the move. De Koker claimed that “Hundreds of suppliers are facing a cash crunch due to long production shutdowns at Chrysler and General Motors,” and “he fears that many suppliers won’t be able to ramp up production once Chrysler and GM start building vehicles again.”
The Detroit Free Press adds, “At least 16 [parts suppliers] with U.S. operations already have gone bankrupt.”
The Wall Street Journal speculates that “The Treasury Department’s rejection of the supplier industry’s bid for aid signals that the Obama administration wants to draw the line on how much taxpayer money it will spend on the U.S. auto industry.”
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