• Apr 9, 2009
The world's largest automakers are intertwined in a myriad of ways and they need to watch their competitors in both good times and bad. When talk of a GM bankruptcy was first floated, the discussion of the effects naturally led to GM's suppliers. That discussion then led to what the effects would be on other car companies if a swath of suppliers was suddenly pulled under, and both Ford and Toyota indicated they would be adversely affected by a GM's fall.

Now the president of Toyota Motor Sales USA, Jim Lentz, has said that the automaker can handle a GM bankruptcy. Although GM and Toyota share roughly 330 suppliers, Lentz says "only a small number... are critically short on cash," without giving any indication of how many shared suppliers are included in that assessment. Even for those that might be in trouble, the $5 billion Supplier Support Program should further minimize the number of losses among them.

[Source: Detroit News | Image: Bill Pugliano/Getty]


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  • 14 Comments
      • 5 Years Ago
      Buzzard ready to circle around dying animal.
      • 5 Years Ago
      Toyota is ready because they can likely shift to Japanese suppliers building the same models in Japan.

      Toyota is ready becuase they still want a bigger slice of that truck market.

      Does anyone here know iif GM could just announce one day that they have entered Chapter 11 and have already negotiated an exit with their creditors?
        • 5 Years Ago
        You bring up an interesting point, "Toyota is ready because they can likely shift to Japanese suppliers building the same models in Japan."----Why can't GM do the same? I know they are shifting to that, Cruze will be here and there, next Malibu will be based on Opel, so one begs to ask why is GM doing it NOW, when this has been an industry standard for decades?
        • 5 Years Ago
        to answer your question, yes.

        GM can walk to the court with a packaged bankruptcy without any disruption to their activities. For what the speculation is, this is the likely scenario.

        Bankruptcy will just be how they shed their bad stuff and walk away from legacy debt that has no impact on future business.
      • 5 Years Ago
      Probably just won't know, definitively, their shared supplier base will be affected if/when enters Ch11.

      Toyota should have a descent inventory quantities to last them until their most-needed suppliers are able to continue to ship more parts. Or suppliers may consolidate businesses to provide a sets of parts for the other automakers.

      But even if GM does go Ch11, it won't stop all vehicle production. It's a possibility that the brands that are shed (either shut down or sold) may have life as a separate business entity (almost) entirely removed from GM's core products.
      • 5 Years Ago
      I think Toyota has so many billions of dollars of cash on hand that if a supplier goes belly-up they could easily buy it if the government doesn't step in to bail it out.

      I think the past 6 months has allowed the perception of "too big to fail" has cooled off a lot and now the markets and consumers are expecting it to happen that when it does it isn't a shock.

      If a bankruptcy happened a week or so after Lehman Brothers, then the shock would have sent the world economy into a tailspin unable to recover. Now that things have abated I think everyone realizes it's time to cut the cord and let the chips fall where they may.
      • 5 Years Ago
      Nice Truck.
        • 5 Years Ago
        And thank God he's not ten pounds heavier or that whole door would cave in.
      • 5 Years Ago
      Wonder what'll happen to the matrix/vibe relationship
        • 5 Years Ago
        Probably not much. Curiously enough, they aren't even assembled in the same country. Vibe = Fremont, CA; Matrix = Ontario, Canada.
      • 5 Years Ago
      By the time if/when it happens, they'll have spent about 6 months preparing.

      So bankruptcy is a different story today than last Nov. But by how much, who knows?

      They also stuck themselves out saying it would be bad and now that GM is getting support from the Guberment in terms of warranties and more it may not be so bad.

      But the biggest reason is that its looks to outsiders like its going to happen and Toyota has to reverse their original statement to assure investors, creditors, customers, etc that things are under control regardless of the actual situation.
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