Parts Supplier Bankruptcy Could Delay Camaro Debut

The all new Chevrolet Camaro isn't the car that will make General Motors, but it certainly could become the one to break the automaker if problems with a major parts supplier manages to delay its February 17, 2009 introduction. Thanks to the August 2008 bankruptcy filing of Cadence Innovation, GM may not have a supplier available to make door panels and other key components for Chevy's iconic pony car. As of this writing the supply company is liquidating its assets while still possessing the equipment that GM loaned the company to build the needed parts.

GM is suing Cadence in a bid to acquire Camaro specific tooling and parts from Cadence by January 12th to give to a new supplier who would provide finished parts to keep the Camaro on schedule. Even a one day delay could cost the automaker millions of dollars as the company's Oshawa, Ontario assembly plant would be shut down until all Camaro components are in place.

In December 2008, GM received a huge gift in the form of a 9.4 billion dollar loan package from the federal government. That package is expected to see GM through the next several months as the automaker brings new products to the market, including the Camaro, slashes costs, and restructures. If the Camaro is delayed it could impact the company's recovery, possibly forcing GM into federal ordered and guided bankruptcy.

The Chevrolet Camaro is one of several new models GM plans to release in 2009, passenger vehicles the automaker hopes will stem the company's sales slide which picked up steam in 2008 as gas prices rose and consumers opted for smaller vehicles made the company's competitors. By late summer when credit began to dry up, GM faced another problem: buyers couldn't secure credit to purchase a new vehicle, with tens of thousands of consumers locked out of the market.

Other vehicles that GM plans to debut in 2009 include the Cadillac SRX, Pontiac G3, Cadillac CTS coupe, Buick LaCrosse, and Chevrolet Equinox. No one model is expected to shake things up for GM, but collectively the automaker expects that its updated fleet will make the company competitive once again.

However, auto parts supplier bankruptcies is something beyond anyone's control, something GM and other car manufacturers may have to contend with throughout 2009 if the economy continues to press hard against the beleaguered automotive industry. Intervention from the Obama Administration is possible, but at what cost will the American taxpayer be willing to pay in order to keep the car industry afloat?

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Why Chinese Auto Parts Stocks Could Be Valuable

The invasion has begun and there's nothing we can do about it. If I were an auto parts manufacturer in North American, I'd be concerned.
In early February, I wrote about an auto parts manufacturer in this column that's planning a major global expansion. The company recently announced its first sales order in the North American market.
Based in Jinzhou City, Liaoning, China, Wonder Auto Technology, Inc. (NASDAQ/WATG) operates through a number of subsidiaries that design and manufacture automotive electrical parts and suspension components. In 2006, the company ranked second in sales of automotive alternators and starters in the China market.
Wonder Auto Technology currently sells five different series and over 150 models of alternators, 70 models of starters and various suspension-related parts, supplying a number of auto makers, engine producers and auto parts suppliers in China and abroad. Some of the company's customers include Beijing Hyundai Motor Company, Shenyang Aerospace Mitsubishi Motors Engine Manufacturing Co., Ltd., Harbin Dongan Automotive Engine Manufacturing Co., Ltd., and Tianjin FAW Xiali Automotive Co., Ltd.
Recently, Wonder Auto Technology opened an office in Detroit and hired a former executive from Delphi. The company just reported that one of its subsidiaries, Jinzhou Halla Electrical Equipment Co., Ltd., received a four-year supply agreement for its starter and alternator products from a major North American OEM automotive manufacturer. The company didn't offer the name of the customer.
All of the units will be delivered directly to the customer's facility in North America and the total value of the contracts is expected to be over thirteen and a half million dollars. Now, this is a small order by any measure, but I think it's the beginning of a major offensive by this company to penetrate the domestic auto parts business.
The great advantage that Chinese manufacturers have is their extremely low labor costs. The auto parts business is already extremely competitive in the domestic market and now there's a new entrant that offers enormous economies of scale.
The Chinese are about to invade the domestic auto parts business and, to be blunt, I'd much rather be an investor than a competitor in that industry.

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