Automotive parts suppliers plan to seek an additional $8 billion to $10 billion in loan guarantees as they grapple with the sharp decline in auto sales and a deepening crisis due to the bankruptcies of automakers General Motors Corp. (GMGMQ.PK) and Chrysler LLC, according to media reports Tuesday.
The Original Equipment Suppliers Association, or OESA, and Motor & Equipment Manufacturers Association, or MEMA, reportedly plan to request additional aid from the government on Wednesday, after negotiating federal loans earlier in the year. They will request the U.S. Treasury to back at least a part of loans for auto suppliers from banks to lessen risk and increase lending. President Barack Obama's auto task force initiated a $5 billion financing support program in April to avoid shutdowns as GM and Chrysler operated with $17.4 billion in government funding and faced the possibility of filing for bankruptcy protection at that time.
Ford Motor Co. (F) had declined to participate in the programs, saying it had enough funding to pay its suppliers. However, supply groups have said the program falls short of what they need. It was found in a survey that only about half of the automakers' major suppliers were eligible or elected to participate in the program.
However, auto suppliers are now seeking more guarantees as they face revenue shortfalls amid closure or idling of auto plants. They have wanted that temporary plant shutdowns by Chrysler and GM during the Chapter 11 proceedings of the two companies threw them into a crisis.
The auto suppliers plan to use the aid mainly to help pay workers and buy raw materials. They will need loans to commence production of parts for GM and Chrysler once the automakers resume manufacturing.
The groups also want the government to develop incentives to spur commercial lending in the auto supplier sector and have suggested that the government provide more debtor-in-possession financing to GM and Chrysler so that the companies could inject immediate liquidity into the supply base.
The suppliers plan to meet with the President Obama's auto task force at the Treasury Department on Wednesday, and the U.S. House and Senate members later in the week. They have reportedly prepared a presentation arguing that as many as 500 companies could face a severe cash crunch, including the possibility of liquidation.
In April, Visteon Corp. (VSTN.PK) and Metaldyne Corp. filed for bankruptcy protection, while Lear Corp. (LEA) and TRW Automotive Holdings Corp. (TRW) are trying to reach new deals with their creditors by June 30.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.