J.D. Power and Associates Reports that U.S. Light-Vehicle Retail Sales in February are down by nearly 38% from one year ago. GM and Chrysler LLC are receiving TARP money from a government bailout. The suppliers for the US auto companies are not getting any assistance. Many are facing a tight cash flow that could force them into bankruptcy. They have high priced materials (like steel) in their supply chains. Many have significant inventories of goods. While car sales have declined 38%, demand for auto parts for some vehicles have declined even more. Almost every vehicle is now over the desired 60 day dealer inventory window. Very low sales and high priced materials in the supply chain may force many auto suppliers bankrupt. This could lead to a domino effect of prolonged auto manufacturing plant shutdowns. The Obama Administration needs to stimulate car sales this year. Unfortunately, there is nothing in the works that will accomplish that goal. Here is an AP video highlighting the difficulties of one auto parts supplier.
First Person: Auto woes roll down to parts maker(AP)
The struggles of the Big Three auto makers means worry at a range of suppliers making the raw materials going into vehicles, suppliers like FormTech Industries in Royal Oak, Mich. (Feb. 27)