Detroit: The pressure on US auto parts makers and dealerships mounted on Monday with more posting steep losses, while auditors either expressed doubt over the ability of some to survive or were expected to do so soon.
US auto parts suppliers and dealerships face growing financial strains amid the downturn in auto sales that has monthly sales rates fall to the lowest level in 27 years.
For parts makers, deep production cuts by automaker customers in recent months have severely crimped revenue, while dealership groups are stymied by cash-draining inventory and few signs that US auto sales will pick up any time soon.
Among the parts suppliers, Visteon Corp said it expects its auditors to question its ability to continue as a going concern, Noble International Ltd said it was seeking short-term funding from automakers and Dana Holding Corp posted a $256 million fourth-quarter net loss.
Visteon said a “going concern” notice could trigger a default and it was in discussions with creditors on a waiver for its credit facilities.
Noble said without further help from General Motors Corp, Ford Motor Co, Chrysler and Comerica Inc it is unlikely it will be able to maintain operations to 23 March.
Dana said it expects to trim the workforce to about 24,000 by the end of March from roughly 25,000 now, and make further reductions the rest of 2009, according to its annual report filed on Monday. Dana cut about 6,000 positions in 2008.
“We believe we are taking the difficult actions necessary to survive in the current environment and compete over the long term,” Dana Chief Executive John Devine said in a statement. “There can be no assurances, however, if the global economy deteriorates substantially beyond our planning assumptions.”
Dealerships also racked up losses.
Asbury Automotive Group Inc posted a $365.4 million fourth-quarter net loss and its auditors raised doubt about its ability to continue as a going concern.
Lithia Motors Inc posted a $4.2 million fourth-quarter loss, while Sonic Automotive sought an extension to file its annual report and was assessing whether it would be in compliance with its debt covenants through the end of 2009.
Sonic said its public accountant recently said it would have to consider including a ‘going concern´ notice.
Auditors for American Axle & Manufacturing Holdings Inc have warned that the problems at top customers GM and Chrysler threatened its ability to continue as a going concern. Lear Corp also expects a “going concern” notice.