Almost Bankrupt: GM Parts Suppliers Demand Cash Up Front


It might not make a difference whether GM (GM) actually declares bankruptcy or not. As long as people believe it will go into bankruptcy soon por in a few months, it won’t be up for much credit from customers or suppliers. Indeed, as Bloomberg reports a small number of its 3500 parts suppliers are now demanding cash up front, convinced that they won’t get paidif they wait. GM, eager to hold onto every penny it has in this difficult time, of course rejected those demands.

A counterpoint to consider: It makes sense that the parts suppliers would want cash up front, but then, if they’re not selling to GM (and Chrysler and Ford) who else are they going to be dealing with. Because of how concentrated the market is, the automakers are likely to retain power over suppliers even with their own situation so bad.

You have to figure consumer mentality is similar. If it’s true, as we’re told, that customers would never buy from GM if it were in bankruptcy, then why would they buy today, with bankruptcy a possibility in a couple weeks? Well, actually they’re not doing much buying today either. Unit sales fell 41% last month.