Elevated supplier debt levels and inflationary pressures could soon lead to more bankruptcies and accelerate consolidation in the supply base, a new study found.
Elevated supplier debt levels and inflationary pressures could soon lead to more bankruptcies and accelerate consolidation in the supply base, according to a recent analysis of supplier financials by Deloitte.
The risk of supplier bankruptcies"may be increasing over time," Deloitte concluded in its 2023 Automotive Supplier Study, which analyzed financial data from about 300 suppliers. In February, North Carolina-based Stanadyne filed for Chapter 11 bankruptcy, in part because of rising interest rates. Michigan-based supplier Gissing North America filed for Chapter 11 last year.
"As we've seen with the pressure around microchips, we need to get ahead of that. Volatility is only going to continue," he said. While automakers can easily pass higher costs on to consumers or to their suppliers, parts makers don't have much wiggle room, said Tony Flanagan, a managing partner at consulting firm AlixPartners.
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