Fitch have placed seven US auto industry suppliers on ‘ratings watch’ because of the threat of the potential bankruptcy filing by General Motors.
The ratings agency state that if or when GM file for bankruptcy, “Fitch believes that the resulting contraction in auto production, the supply chain, trade credit and capital-access would cause widespread shutdowns and bankruptcies throughout the supply chain.”
Fitch added that even if the OEMs avoid bankruptcy, major restructurings of their operations will occur, causing material changes in the operations of their Tier 1 suppliers. These restructurings could also lead to ratings actions, providing further rationale for placing these suppliers on Rating Watch Negative, the statement said.
The action affects American Axle & Manufacturing Holdings, ArvinMeritor, Hayes Lemmerz International, Johnson Controls, Tenneco, TRW Automotive Holdings, and Visteon.