@Risk

Analysts are expecting automobile sales to rebound this year as the economy improves, but by all accounts that I’ve seen, automotive suppliers aren’t out of the woods yet.

There is still too much capacity. Plus, many suppliers continue to face difficult credit markets.

The Detroit News reports that the Original Equipment Suppliers Association (OESA) recorded almost 60 automotive suppliers seeking bankruptcy protection in 2009.  200 others simply closed.

But, these failures didn’t disrupt production at Ford, GM, or Chrysler, and in fact, the Obama administration sees losses like these as necessary “industry consolidation.”  According to the article, Ron Bloom, the car czar, thinks capacity needs to be reduced by 30 percent.

The American auto industry — built for annual domestic sales of 15-16 million vehicles per year –shrunk to about 10 million vehicles sold in 2009. As the economy grows, auto sales will inevitably follow suit. However, most anticipate that totals will stay below 13 million vehicles sold in 2010.

As a result, automotive suppliers can continue to expect a wave of consolidation as businesses try to regain footing by restructuring, boosting economies of scale, and accessing new technologies.

Even so, most respondents in the OESA Automotive Supplier Barometer survey from November 2009 are feeling optimistic. When asked to describe the general 12 month outlook of their business, 72 percent said they are somewhat more optimistic than they were two months ago. 22 percent said their outlook is unchanged.