DEFINITION of 'Auto Supplier Support Program — Auto SSP'

The Auto Supplier Support Program was a $5 billion program funded by the U.S. Department of the Treasury intended to ensure the availability of parts to the U.S. auto industry. Due to the tenuous position of the large U.S. automakers in 2008 and 2009, the Auto Supplier Support Program (Auto SSP) was just one of many intended to help stabilize the financial crisis in the auto industry to give those companies time to restructure their operations. Both General Motors and Chrysler opted into the program.

BREAKING DOWN 'Auto Supplier Support Program — Auto SSP'

The Auto Supplier Support Program was announced March 19, 2009. Under the program, the government substituted its own credit to certain qualified suppliers for qualified receivables arising from new auto production by the U.S. automakers. Because the financial demise of the auto makers was deemed imminent, suppliers were reluctant to extend credit to them, thus bringing production to a halt. For a fee, the U.S. government guaranteed payment to qualified suppliers, or would allow such suppliers to sell their qualified receivables for a modest discount.

Key Elements of the Auto Supplier Support Program

Some key elements of the Auto Supplier Support Program included:

  • 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.

Eligibility for the Auto Supplier Support Program

Any domestic auto company was eligible to participate in the program. If a company decided to participate, they would 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 were required to make a financial commitment in connection with the support received from the Treasury.

Any U.S.-based supplier that ships to a participating auto manufacturer on qualifying commercial terms was eligible to participate in the program. Decisions about which suppliers and which receivables would receive protection were made by the participating auto companies.

RELATED TERMS
  1. Auto Insurance

    Auto insurance is purchased by vehicle owners to mitigate costs ...
  2. Program Trading

    Program trading uses a computer algorithms to buy and/or sell ...
  3. Cash for Clunkers

    Cash for Clunkers was a former federal program that gave owners ...
  4. Auto Industry ETF

    An auto industry ETF is an exchange-traded fund (ETF) that invests ...
  5. Program Manager

    A program manager oversees the management of a specific program, ...
  6. Just In Time - JIT

    The just-in-time inventory system is a management strategy that ...
Related Articles
  1. Investing

    Big Tech M&A Is Transforming the Auto Industry

    Tech companies are racing to secure a foothold in what could become a $70 billion market, Intel says.
  2. Investing

    Key Financial Ratios to Analyze The Auto Industry

    Learn about the most critically important financial ratios investors and market analysts utilize to evaluate companies in the automotive industry.
  3. Investing

    6 Stocks for the Electric Car Boom Not Named Tesla

    As the electric car market picks up speed, it's not just the automakers that will benefit.
  4. Investing

    Apple’s Suppliers Behaved Better in 2016

    Apple’s 2016 supplier audit revealed better working conditions, environmental practices and care over sourcing conflict materials.
  5. Investing

    10 Major Companies Tied to the Apple Supply Chain (AAPL)

    Apple has one of the best supply-chain models. Here are some of the top businesses involved, and the benefits and challenges for all.
  6. Personal Finance

    AutoNation Numbers Confirm U.S. Auto Sales Slump

    AutonNation has provided the latest evidence that demand for cars and trucks in the U.S. is slowing.
  7. Personal Finance

    OCC Warns Auto Loan Market Speeding Toward Trouble

    Auto loan lenders may face trouble with the OCC warning of delinquencies and defaults.
RELATED FAQS
  1. Who are Tesla's (TSLA) main suppliers?

    Learn about the electric car manufacturer, Tesla Motors, and discover the more than two dozen suppliers that provide parts ... Read Answer >>
  2. What raw materials do auto manufacturers use?

    Learn about some of the raw materials required for auto manufacturing, including iron for steel, aluminum, rubber, and petroleum ... Read Answer >>
  3. If I already hold a professional certification am I eligible for any exemptions from ...

    No. To obtain a CFA designation, you must complete all levels of the CFA program regardless of whether you hold a professional ... Read Answer >>
  4. Who are Ford's (F) main suppliers?

    Explore the history and current operations of Ford Motor Co. and discover some of its primary global parts suppliers. Read Answer >>
Trading Center