Investors are beginning to show renewed interest in the automotive industry after months of near-frozen credit markets, bankruptcies and plummeting stock prices plagued many of metro Detroit's largest firms.

In the last month, four publicly traded automotive firms have raised or at least announced plans to raise more than $2bn by issuing new shares of common stock and bond debt, which analysts say indicates that the worst is likely to be behind us, at least in the eyes of the market. These companies are American Axle & Manufacturing Holdings Inc., TRW Automotive Holdings Corp., Tenneco Inc., and Ford Motor Co.

While this flurry of activity is seen by analysts as a positive sign, firms that are smaller and further down the supply chain are still facing nearly frozen capital markets. "It sounds crazy, but it's probably easier to raise $2bn than it is to raise $10 million," said Brad Coulter, director at Bloomfield Hills-based corporate finance and turnaround firm O'Keefe & Associates Inc.

Commercial banks, which traditionally have provided much of the capital for smaller auto suppliers, are still bogged down by bad real estate loans and skittish about putting what precious capital they have into the auto industry, Coulter said.

Excess capacity still plagues much of the lower tiers of the supply base, making it unclear which companies will survive and which have yet to fail. That, combined with the fact that the value of automotive assets such as real estate, plant equipment and machinery is still very low makes allocating capital into middle-market companies a difficult proposition. 

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