Sunday October 09, 2005

Delphi Files for Bankruptcy

nytimes.com, reuters.com :

Delphi, the nation's largest auto supplier, filed for bankruptcy-court protection on Saturday, the largest filing ever in the domestic auto industry. The move reinforces the industry's deepening financial crisis. Delphi, which employs close to 50,000 Americans and 185,000 people worldwide, has reported losses of $5.5 billion in the last six quarters, and its cash reserves are dwindling. With half of its business coming from G.M., its fortunes have waned along with those of its former parent.

When G.M. spun off Delphi in 1999, the automaker agreed to pay health-care and pension benefits for Delphi retirees in the event of a bankruptcy filing within eight years. Financial analysts have projected that this provision could cost G.M. $6 billion at a time when it can ill afford more problems.

Many analysts believe it is only a matter of time before G.M. and Ford come to the same crossroads that Delphi has reached, with Toyota, Hyundai and other competitors continuing to lure more American consumers.

See also :

1. GM sells assets to Toyota
2. Ford, GM SUV sales nosedive
3. American automakers shift from bad to worse
4. GM to cut 25000 jobs in U.S. by 2008
5. GM, Ford debt cut to junk status

(2005-10-09 15:16:32 SGT) [Biz] Permalink

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