Dire earnings reports this summer have prompted some suppliers to sell off operations, rethink strategies and even seek bankruptcy protection. And there’s much more coming. The global industry likely will see 50 to 100 additional supplier bankruptcies in the next six to nine months, forecasts Dietmar Ostermann, U.S. automotive advisory leader for PwC.
“The ramp-up has gone well, but the bankruptcies are not done yet,” Ostermann told Automotive News last week as he drove away from a supplier visit. Crisis support from lenders and governments? “That’s over now. The banks are tightening back up, and a lot of suppliers are still not in good shape. Many of them are loaded up in debt when they need cash. Certainly, some plants will close.”
The company burned through $172 million in cash in the second quarter as it coped with production slowdowns in Europe, Mexico and India. Its net debt increased by $203 million to $1.43 billion, it told analysts in July, even as it noted encouraging signs from its customers.
But Rabiller added at the time that he did not expect to see factory volumes return to 2019 levels until 2022.