Auto Supplier Support Program: 

Stabilizing the Auto Industry at a Time of Crisis 

Consistent with President Obama’s commitment to stand behind the American auto industry during the 

economic crisis, the President’s Auto Task Force is currently reviewing viability plans submitted by GM 

and Chrysler. Secretary Geithner, in consultation with the Task Force, will be making a determination of 

the viability of these plans in the coming days. 

However, what is already unmistakably clear is that these companies, and the vast network of businesses 

that supply parts to them, will need to engage in a substantial restructuring to achieve long-term 

viability. This road will not be easy. But as the restructuring process moves forward, the Administration 

is committed to helping stabilize the industry, protect American jobs, and give consumers the confidence 

and the means to purchase cars. 

That is why today the Obama Administration announced a new program to help stabilize the auto supply 

base. A functioning auto industry relies on not only viable auto companies but on a network of auto 

parts suppliers that design and build the components that go into our cars and trucks. America’s auto 

parts suppliers employ more than 500,000 workers across the nation. Yet because of the credit crisis and 

the rapid decline in auto sales, many of the nation’s auto parts suppliers are unable to access credit and 

are facing growing uncertainty about the prospects for their businesses. Supplier instability creates 

greater uncertainty for the auto companies that rely on the parts they ship. This vicious cycle of frozen 

credit markets, growing supplier uncertainty and growing auto company uncertainty has the potential to 

unravel the industry and short-circuit restructuring efforts at companies like GM and Chrysler. 

Brief Description of the Auto Supplier Support Program:

The Obama Administration’s new Supplier Support Program will help break this vicious cycle by 

providing suppliers with the confidence they need to continue shipping their parts and the support they 

need to help access loans to pay their employees and continue their operations. 

• The program will provide suppliers with access to government-backed protection that money owed 

to them for the products they ship will be paid no matter what happens to the recipient car company. 

• Participating suppliers will also be able to sell their receivables into the program at a modest 

discount. This will provide suppliers with desperately needed funding to operate their businesses and 

help unlock credit more broadly in the supplier industry. 

• The program will be run through American auto companies that agree to participate in the program. 

Suppliers to those companies that agree to maintain qualifying commercial terms will have the 

opportunity to request this government backed protection. If granted, the supplier will pay a small 

fee for the right to participate in the program. 

• The Treasury Department has made available up to $5 billion in financing under this program. 
DETAILS ON THE ADMINISTRATION’S SUPPLIER SUPPORT PROGRAMS 

Program Operation: 

Suppliers that ship parts to auto companies generally receive payment for those shipments about 45 - 

60 days later. In a normal credit environment, suppliers can either sell or borrow against those 

commitments (so-called “receivables”) in the interim period to pay their workers and fund their 

ongoing operations. However, in the current environment, due to the uncertainty about the ability of 

the auto companies to honor their obligations, banks are unwilling to extend credit against these 

receivables. To help address this problem, the Supplier Support Program will provide selected 

suppliers with financial protection on monies they are owed by domestic auto companies and the 

opportunity to access immediate liquidity against those obligations. 

The program will help provide much needed certainty to key suppliers and the auto industry during 

this restructuring period. This Administration recognizes that the failure of certain suppliers is a 

natural, albeit painful, part of the business cycle and that we cannot and should not stand in the way of 

the substantial restructuring and capacity reduction that needs to take place in the auto supply industry. 

But this program will allow this process to take place in an orderly fashion, without threatening the 

stability of the largest automobile companies. 

Eligible auto companies 

Any domestic auto company is eligible to participate in the program. If a company decides to 

participate, they will request an allocation from the U.S. Treasury to provide government-backing and 

then work with a third-party servicer to establish a receivables purchase program. Auto companies will 

be required to make a financial commitment in connection with the support received from the 

Treasury. General Motors and Chrysler have already agreed to participate in the program, and will 

have fully operational purchase programs established shortly. 

Eligible suppliers 

Any U.S.-based supplier that ships to a participating auto manufacturer on qualifying commercial 

terms may be eligible to participate in the program. Decisions about which suppliers and which 

receivables will receive protection will be made by the participating auto companies. 

Suppliers interested in the program should contact their lenders to determine whether they can obtain 

requisite consents to sell their receivables. Once they have done so they should contact the 

procurement officer at their customer/auto company. Once approved by the auto company, suppliers 

will be able to receive the protection for a modest fee, which will have the backing of government 

funds. These suppliers will also be able to sell their receivables into the program for a modest 

discount, which will provide them with immediate liquidity. 

Eligible receivables 

Any receivable created with respect to goods shipped after March 19, 2009 that is made on qualifying 

commercial terms between a supplier and a participating auto company will be eligible for the 

program.