Autoblog

Al Koch helped see over the revival of Kmart, so he knows a thing or two about financial difficulty - and that's exactly what he sees in the auto-part industry. Koch specially mentions decreasing production from domestic automakers as potentially causing severe trouble. While a move away from incentives has increased the profitability of the Big Three, it puts the squeeze on suppliers by decreasing production (you can bet that none of that profit makes its way down the supply chain). The loss of cash flow is particularly hazardous to those who have made substantial capital and R&D investments - not the sort of businesses that the industry wants to see struggling.

One potentially good shred of news is that capital is still easy to obtain, so that those suppliers who wish to borrow money can still do so. Conditions could also improve if gas prices fall or if the domestic automakers manage to stabilize their market share. A relatively painless resolution of the Delphi situation would also be viewed as a positive sign for the segment.

[Source: Houston Chronicle] 

Within the auto industry, it's something of an secret that most suppliers prefer to work with Asian "transplant" OEMs, who are perceived to be easier to work with. Planning Perspective's recently released survey shows that the Big 3 are making substantive improvements, but still have a long ways to go until becoming Best Friends Forever with the companies that supply parts to them.

Toyota once again topped the survey, earning 407 points out of a possible 500. Honda followed behind with 366 points, and Nissan brought home the bronze with 300 points. All of those scores are down or flat from last year, but they're still substantially better than Stateside competition. Tops among domestic automakers? DaimlerChrysler with 218 points, followed by  Ford with 174, and General Motors bringing up the rear with just 131.

While 76 percent of Toyota's suppliers stated that their customer relationship was "good" or "very good" and 11 percent characterized their rapport as "bad", only 3 percent had a favorable view of their relationship with GM, and a whopping 86 percent called their situation "poor."

[Source: Detroit News]

Delphi Corp. has announced that vice chairman Dave Wohleen is opting for retirement at age 56, and has already begun putting his responsibilities on the plates of execs around him in time for a June 1 retirement. He'll get the retirement benefits stated in his contract, which may or may not make the union guys unhappy -- we'll see.

Wohleen began working in the auto business in 1978 as an engineer for Pontiac.

[Source: Reuters]

With the Securities and Exchange Commission a bit curious about some of General Motors' accounting practices as it relates to the automaker's price concessions negotiated with suppliers, Lear now finds itself on the receiving end of a subpoena of its financial records. Lear 'fessed up to its newfound role in the investigation last week, but received the Fed's request back in February.

Records of transactions dating back to 2001 are said to be of interest in the investigation. GM has long been regarded as the most aggressive of the automakers when it comes to putting the screws to suppliers, so it's likely safe to assume that there's a bit of Schadenfreude circulating among its suppliers with word of this case.

[Source: The Detroit News]