A study involving 350 automotive conducted by PRTM reveal that Asian and European auto suppliers are likely to take over their distressed counterparts. For example, the study indicates that China's Guangzhou Automotive Components and Weichai Power Company are leading suppliers in the auto industry who are well positioned to buy suppliers in other countries. According to the study, most of the bankruptcies and buyouts are likely to occur among suppliers of chassis and electrical and electronics systems. Chassis systems, which include brakes, steering, axles, and suspension, require considerable capital expenditure and thus any reduction in order volume adversely impact suppliers' profitability. Since electronics represent the future of vehicle industry, many suppliers would like to buy other companies in this area to add such capabilities in their businesses. The study suggested that only one U.S. company, glass and paint manufacturer PPG of Pittsburgh, PA, would potentially escape this shakeout due to its diversified portfolio. Several of the remaining 31 North American auto suppliers will either declare bankruptcies or be acquired.
Source: "Several Chinese Auto Suppliers Likely to Emerge as Leading Global Consolidators." www.prtm.com Press Release, August 2009