US auto sector recovery may be affected by ongoing reluctance of some banks to lend to suppliers, Original Equipment Suppliers’ Association president and CEO Neil De Koker said, adding he expected much of the sector to be profitable this year after sharp cuts to their break even-level costs.
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He cited capital access for suppliers, alongside consumer confidence among prospective buyers, as key to the industry’s recovery, according to Dow Jones Newswires.
“Capital is still very tight in the industry,” De Koker said at a Society of Automotive Analysts event, citing one transplant supplier who was turned away by 100 potential lenders.
Justin Mirro, managing director at investment bank Moelis & Co, said the reluctance of commercial lenders was evident when suppliers sought to take advantage of the rise in production in the last few months of 2009. He said some suppliers were having difficulty raising loans to buy tools and raw materials to meet new orders, reflecting ongoing concerns about the sector among commercial lenders.
Many of the 150 to 200 liquidations seen among US suppliers during the latest downturn were among smaller companies whose relationship with lenders had soured, De Koker added.
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