Basically, there is way too much capacity in the US (and worldwide, for that matter). Even at a 17M SAAR in the US, the supply base was running on nearly non-existent margins. Knock down the production rate by nearly half, and the huge amount of overhead required to run a modern “full-service supplier” creates a huge drain on the finances.

If we knock out about half of the supply base (maybe a bit more), then the remaining suppliers have a chance of surviving and producing healthy margins. If not, then much of the base will go under, and then we’ll have a rather interesting crisis on our hands.