At this point in 2010, public automotive parts companies have reported financial reports if not twice, at least once.  What we are all seeing is (largely) a return to profitability among the supply base, which is driven by i) increased production volumes, and ii) improved cost containment.  On paper and in theory, this looks great - the industry is apparently recovering.  But what about the banks?

 Profits, EBITDA, and other improved financial metrics aside, are the banks (be they Canadian or American) ready to keep rolling the dice in the automotive sector?  It is entirely possible that the banks might still decide to reduce their exposure to the automotive manufacturing sector in the near-medium term, regardless of their customers performance.  If this happens, is their sufficient liquidity in the market to pick-up the slack?  Or it likely that we could see a second wave of distressed suppliers, except this time performing well, just unable to raise financing?  If this is the case, it is possible that the more liquid survivors might be able to pick-up profitably restructured companies at discounted prices.  Alternatively, we could see the re-entry of private equity players looking for low-priced but valuable assets.

One thing is for certain, the financial turmoil in the sector is far from finished.