GM helping Delphi by forgoing discounts on spare parts

Despite the fact, General Motors itself is suffering huge losses this year; they have decided to help one of their chief spare parts suppliers Delphi. Delphi is in a state of bankruptcy at the moment and they are now getting financial help from their old owners GM. Delphi also announced that they are delaying plans to ask a judge to reject its labor contracts.

This is to prevent any strikes from their workers, which would lead to more problems for General Motors. They have also decided to accelerate talks with GM over restructuring efforts. GM is helping Delphi by temporarily giving up previously agreed-upon price reductions on auto parts for 2006. The move is aimed at restoring the financial health of the company so as to prevent bigger problems for GM in the longer run.

Delphi Chief Executive Steve Miller said in a statement: “These constructive actions demonstrate a willingness to accelerate efforts to achieve consensual resolutions to the significant challenges facing Delphi.” GM alone accounts for nearly 54 percent of Delphi $28.6 billion of revenue last year. They have however not revealed on how much it would cost them extra to forgo their discounts over the auto parts.

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