The odds of default for auto parts suppliers jumped in April, and experts expect increased consolidation and bankruptcies within the industry as the coronavirus pandemic continues to hammer global new vehicle production.

S&P Global Market Intelligence's median one-year market signal probability of default rose to above 20% for auto parts and equipment suppliers in April, up from below 5% at the beginning of 2020. For tire and rubber suppliers, the probability of default rose above 15% in April, up from below 5% in January. The figure represents the odds that a company will default on its debt within the next year based on fluctuations in the company's share price and other country and industry-related risks.

While the odds of default both for industries have fallen slightly from the initial spikes in early April, suppliers continue to feel the same pain as the automakers to which they sell amid a global drop in demand for new vehicles and slowdowns in production.

Automakers including General Motors Co., Ford Motor Co., Nissan Motor Co. Ltd. and Daimler AG saw the industry's default odds rise to above 20% in April from less than 5% at the beginning of the year. Meanwhile, suppliers such as Sumitomo Electric Industries Ltd., Valeo SA and Hyundai Mobis Co.Ltd. showed the greatest risk of default among their peers.

The auto supply industry is likely to see an increase in bankruptcies and consolidations because of the pandemic, said Wally Hopp, professor and associate dean at the University of Michigan's Ross School of Business. Financial issues stemming from the pandemic could last for years for suppliers as they deal with labor issues, shutdowns and disruptions from their own suppliers, Hopp said.