Restructuring Professionals Salivate Over Supply Chain Disruption

In Sunday’s Members’-only briefing entitled “Auto Disruption ⬆️. Syncreon Group ⬇️,” we discussed, among many other topics (e.g., the macroeconomy, oil and gas distress, FTD Companies Inc., etc.), Syncreon Group BV as a proxy for upcoming auto distress. It seems that bankruptcy professionals have grown tired of saying that healthcare will be the hot area of distress and so focus is turning to auto. Here is Foley & Lardner LLP highlighting warning signs of supplier distress.

On Tuesday, auto industry consultants J.D. Power and LMC Automotive indicated that:

U.S. auto sales are expected to drop about 2.1 percent in March from a year earlier, partly due to bad weather, mixed economic data and lower tax refunds….

Mmmm hmmm.

Per Reuters:

Retail sales are expected to touch 1,195,000 units in March, a 3.4 percent decline from a year earlier, the consultancies said on Tuesday.

The first-quarter sales are off to its slowest start since 2013, according to the industry consultants, who estimate retail sales in the quarter to be about 2.94 million vehicles - a decline of 4.9 percent compared to the same period a year ago.

“This is the first time in six years that Q1 sales will fall short of 3 million units. While the volume story could be better, there is remarkable growth in transaction prices, with records being set monthly,” Thomas King, senior vice-president of the data and analytics division at J.D. Power, said.

Interestingly, the average transaction price increased over $1,000 YOY. It is unclear but that could be attributable to the move from lower cost sedans to higher-priced utility vehicles. If consumer confidence wanes — and there are some indications that it is increasingly shaky — this upward trend in pricing should be next to slow down.