Major US car parts suppliers file for bankruptcy

• Source: xinhua
• [10:17 May 30 2009]
• Comments

Two Michigan-based major US auto parts suppliers have filed for bankruptcy, as demand for cars plunged to decades' low levels in North America.

Visteon, former parts-making unit of Ford Motors, has filed for bankruptcy protection in Delaware. The company confirmed on Thursday that it will get financing support from Ford during bankruptcy.

Ford is the only one of the three largest US automakers that is not being driven into bankruptcy.

Meanwhile, chassis manufacturer Metaldyne Corp, a unit of Japan's Asahi Tec Corp, announced on Wednesday that it was filing to the New York bankruptcy court.

Metaldyne, whose largest unsecured creditor with a 27.5-million-US-dollar claim is Chrysler, has accumulated 929 million dollars in liabilities since Dec. 31, Asahi Tec said in a statement to the Tokyo Stock Exchange.

Visteon has been losing money in the past nine years since its spinning-off from Ford in June 2000. According to its Chapter 11 filings, the company has 4.58 billion dollars in assets and 5.32 billion dollars in liabilities, including 862 million dollars owed to bondholders.

"The reduction in vehicle production because of the lack of demand for vehicles has had a dramatic impact on the entire industry. It has caused dramatic pains not only to the vehicle manufacturers, but with all the suppliers," Neil De Koker, president of the Original Equipment Suppliers Association told Xinhua in a phone interview.

"We could lose several hundred suppliers this summer," Koker said. "We lost two major suppliers, and we believe there are other significant suppliers on the verge of potential bankruptcy."

Car sales have slid to 27-year lows and demand for new cars has plummeted more than 35 percent since October amid an unprecedented recession in the United States. US domestic auto industry has suffered huge losses, with Chrysler already in the process of bankruptcy and General Motors heading for an imminent one.