GM's bankruptcy may impact Indian auto component industry

Moody's on Thursday said filing of bankruptcy by America's largest car maker General Motors may adversely impact India's auto component industry, which should increase its exposure in other expanding markets.

'Defaults in payments to creditors are unlikely, but given the dismal state of the US auto market, delays or negotiations on repayment terms may be unavoidable,' Moody's economy.Com said in a release.

This may have downside implications on the cash flows of Indian suppliers in the near term, it added.

Moody's added that 'as the 'Big Three' US auto companies — General Motors, Ford and Chrysler — struggle during the recession, Indian suppliers also inevitably feel the squeeze'.

The biggest concern to Indian suppliers caused by the recent US auto woes is perhaps the downgrade in sales outlook.

'To maintain a strong growth pace, Indian auto part suppliers need to increase exposure to markets that are still expanding,' it said.

Earlier this week, America's largest car maker General Motors (GM) filed for bankruptcy protection but asserted that it would be business as usual in India.