The troubles of the North American car giants General Motors and Ford have sent shock waves through the auto sector and could have far reaching consequences for their Midlands-based subsidiaries, it has been claimed.
Global overcapacity is in the 20 to 25 per cent range, costly union deals, the continuing push for global lowcost sourcing and a lack of competitive models are only a few of the issues facing the industry.
Kevin Honey, Ernst & Young's automotive specialist, said: "These increased trading pressures, added to by the demise of MG Rover, have had severe knock-on effects in the UK, and as auto makers problems grow, so too do those of their suppliers.
"Suppliers are increasingly finding themselves squeezed between their much larger raw material suppliers, who are pushing costs up, and their much larger OEM customers, who are pushing costs down.
"And with an unhealthy reliance on one or two customers it is not surprising that this year has seen over a dozen major suppliers file for Chapter 11 in the US - the right to trade under protection of the courts."
Conversely, if a large component supplier gets into financial difficulty it can send shivers down the spines of car makers, Mr Honey added.