GM suppliers to US may be hit in short-term

A day after car giant General Motors plunged into bankruptcy, Indian component suppliers believe that their exports to the US will be affected in the short-term.

"If GM decides to abandon some models and platforms, to which Indian component firms were supplying, then there will be some short-term affect," Automotive Component Manufacturers Association Executive Director Vishnu Mathur said.

Although there was high risk of doing business with GM of late, so far no defaults of payments have been reported, he said.

"I am confident that in the future also it won't happen," he added.

Currently, over 20 component makers export their products to GM's US operations. Meanwhile, GM India, which has not been directly affected by the bankruptcy, sources its parts from about 130 local manufacturers.

Ernst & Young National Leader Rakesh Batra said Indian suppliers were anticipating a situation like this as GM had been cutting down its production substantially in the last couple of months.

A supplier, who did not want to be identified, said his firm has already been hit by GM's falling sales over the last few months.

"Demand from GM was coming down... With this announcement more plants will be closed down, and there is bound to be an impact," the supplier added.

Rico Auto Industries Managing Director Arvind Kapur, however, said his company would not be impacted as it supplies parts to "smaller vehicles" of GM.

Failing to come back to recovery path, GM has filed for bankruptcy protection in the US on Monday. As part of its restructuring, the company would close down 14 plants in the US by 2012. It had 47 facilities in 2008.