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Automotive components and accessories

Automotive components and accessories

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Automotive Industry Outlook
 

The U.S. automotive industry is facing some of the most complex challenges in its history. Pressures from plunging sales, frozen credit markets, global competition, higher raw material and, until recently, gasoline prices, and growing consumer demand for more fuel-efficient vehicles are driving a transformation of the industry across its entire value chain. With an extraordinary drop in third and fourth quarter sales, the entire industry has been put into crisis mode. The Detroit 3 automakers are in a particularly vulnerable position because their cash burn has increased rapidly as sales volumes have dropped. This rapid cash burn has led two of the Detroit 3 to forecast that their cash reserves will reach minimum operating levels before the end of 2008. 1 With this urgent liquidity crisis at hand, as of this printing, the Detroit 3 have asked for government intervention in the form of bridge loans.

Regardless of the outcome of government assistance, the impacts of the Detroit 3’s liquidity crisis cannot be viewed independently, as there is a high level of interdependency among the U.S. supply base – the collapse or bankruptcy filing of any of the Detroit 3 would have a negative, cascading impact across all OEMs and the supply chain. One recent study commissioned by the Original Equipment Supplier Association (OESA) showed that 58 percent of General Motors Corp.'s North American suppliers also sell parts to Asian-owned U.S. car plants, as do 59 percent of Chrysler LLC's and 65 percent of Ford Motor Co.'s. 2 Given the continuing deterioration in market conditions, we expect a dramatic restructuring of the industry in 2009. Numerous potential scenarios have emerged, including a government bailout or loan, consolidation and Chapter 11 bankruptcy. Whatever scenario eventually results, we expect a “new” automotive industry to emerge with fewer OEMs and Tier 1 suppliers, but with a much stronger long-term outlook.

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    Basic Car Tire Manufacture Ltd.
    Manchester Industrial Estate
    Gates 12 thru 1250
    Manchester Industrial Estate, England HGER23332
    United Kingdom
    Basic Car Tire Manufacture
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