China auto parts firms face liquidity crunch

More than 40 percent of China's auto parts suppliers polled this year face severe liquidity issues and some may fail in the next 12 to 18 months unless they take aggressive measure to conserve cash, a survey showed.

"China's auto suppliers were unprepared for and slow to react to the dramatic slowdown both domestically and globally last year," business advisory firm AlixPartners said on Thursday.

In a similar survey conducted with parts suppliers a year ago, 55 percent of respondents expected to see more than 20 percent growth in revenue during 2008 and 2010.

Also, more than 20 percent of respondents in this year's survey said they had net losses in 2008, and for 2009, more than 50 percent expected net profit margins of less than 5 percent.

In the 2008 survey, none expected net profit margins below 5 percent during the 2008-2010 period, it added.

The report did not specify how many respondents participated in the two surveys.

Auto parts makers, however, will find more growth opportunity in the country's aftermarket -- sales to retailers and the general public -- which is estimated to generate 19 percent of revenue in the overall parts market by 2013, it said. The statement did not provide the current contribution.