Suppliers to GM may be seeking to tighten up on credit terms extended to their financially challenged customer.
Dow Jones reports that three major auto suppliers have said that GM may have to pay cash on delivery for parts if it fails to secure additional federal aid.
The report notes that GM’s financial woes would be exacerbated if suppliers impose more onerous contract terms.
Officials from three suppliers told Dow Jones that no final decision had been made, with Congress and the White House still wrestling over whether to provide more support to the auto sector.
The officials declined to be identified while deliberations continue. The companies provide GM with everything from brakes to entertainment systems, the report said.
“No one wants [cash on delivery], but we have to protect ourselves at this point,” said an official at one supplier. “We have other customers that need products and we have to pay our people to keep our plants open.”
GM has already acknowledged the threat of suppliers switching to cash on delivery from the traditional 60- to 90-day payment terms.
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“We’ve not seen [cash on delivery] in any substantive way, and we’ll just have to continue to work with them,” GM Chief Financial Officer Fritz Henderson said on an analyst call last week.
“Really, we’ve been very appreciative of the support we’ve gotten from our suppliers and expect to continue to have that kind of support.”
