American Axle Still Dented

American Axle & Manufacturing Holdings, Inc. (AXL - Analyst Report) is a leading supplier of driveline systems, modules and components for the light vehicle market. The company makes axles, driveshafts and chassis components for light trucks, sports utility vehicles (SUVs) and passenger cars.

The present condition of the North American automotive industry characterized by slow car sales, production cuts, excessive inventories, rising commodity costs, and market share losses of leading U.S. automakers are affecting the company negatively.

Despite the company's attempts to diversify its customer base, General Motors (GM) still accounts for about 70% of current sales and is constantly implementing production cuts. To make matters worse for AXL, it is exposed to platforms that have faced the maximum cuts. AXL's largest vehicle programs at General Motors and Chrysler account for nearly 90% of the company's total revenues.

Meanwhile, AXL has been adversely impacted by rising commodity costs. This is negatively affecting earnings by $0-$15 million annually. In fact, General Motors and other OEM customers are constantly demanding concessions from suppliers in the form of lower prices.

Read the full analyst report on AXL

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