With auto sales down, and the North American automakers in shambles, other areas of the automotive industry are also beginning to feel tension. Auto parts manufacturers and suppliers help build new cars, but with production dropping, many of these auto parts companies are also making cutbacks and even heading towards bankruptcy as the industry struggles to turn things around.
A significant danger is on the horizon as auto parts companies struggle. If many go out of business as a result of reduced auto sales and production, what will happen when sales eventually rebound? When consumers do finally begin buying cars again, some expect automakers to face all-new problems as there may be greater difficulty in manufacturing new cars without a heavy parts industry.
Some in the auto parts industry, such as the president of the Original Equipment Suppliers Association, have painted a grim picture of the not-so-distant future, expecting that the auto industry is going to get far worse before it gets better. So far, with about ten percent of the auto parts suppliers in the U.S. facing bankruptcy, one Toyota accessories store believes those bleak expectations seem about right.
The credit crunch has hurt many in the industry, including those supplying the parts and components used to build cars says Orlando Chevrolet dealers. As a result, thousands of jobs are at risk, not to mention further hurdles for the automakers if something is not done soon.
Thus far, government loans have helped the suppliers’ largest clients in the short term, but Louisville Pontiac believe that deep problems remain. The credit crunch and low consumer demand has led to sweeping production cuts that have nearly crippled the parts and accessories industry. Like the automakers themselves, many auto parts manufacturers also face production cutbacks at their own factories.
Bankruptcy is a very real possibility for the Big Three. As such, if one major automaker goes under, it may bring many parts suppliers and/or manufactures with it, a real fear for Massachusetts Hyundai dealers and others that do realize things may get worse before they get better. Unfortunately, the automakers are at the mercy of consumers. With dropping demand for new cars, the auto parts industry has to simply be patient amid rising obstacles.
Fewer parts orders from the automakers are certainly putting pressure on the auto parts makers. Chevrolet Chicago dealers say the ripple effect of this is staggering. From large components such as seats, to small electronics, many different types of suppliers are currently at risk. Regardless, the outlook remains in sync with bleak consumer confidence. Continue reading ‘Auto Parts Industry Faces Ripple Effect’
With the recession dramatically influencing auto sales, it isn’t only the Detroit Big Three, or the Japanese Big Three, hurting for more sales. Potential buyers of premium auto brands are also thinking twice about buying new cars.
