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Hundreds of U.S. auto suppliers are in danger of running out of cash by March 1, when they will begin to sustain losses caused by production slowdowns in December and January, according to a trade group representing 400 parts makers.

In making a case for $25.5 billion in federal aid for the reeling supplier industry, the Motor & Equipment Manufacturers Association said parts makers face an imminent "cash crisis" without government aid.

Payments to suppliers from Detroit's auto makers are on track to fall 70% in March - to $2.4 billion from $8.4 billion per month in the fourth quarter - after the companies all but halted production in January amid skidding sales. Payments are due 45 to 55 days after parts are delivered, which is why the crunch will hit in March.

Nearly one-third of auto suppliers are in financial distress and another third expect to be by the end of the first quarter, according to the trade group. Last year, about 40 auto supply companies filed for Chapter 11 bankruptcy protection.

Without more money, the group says, suppliers won't have money to buy raw materials to produce more parts, forcing costly work stoppages among domestic and foreign-based manufacturers with U.S. operations.

"We don't know how that would propagate through the industry," said David Andrea, vice president of industry analysis and economics for the Original Equipment Suppliers Association, which is supporting the request. "It will be a bottom-up implosion."

The Motor & Equipment Manufacturers Association in a statement Thursday said it has yet to formally request funding from the U.S. Treasury Department. Supplier trade groups, however, have been in communication with the Treasury, the administration of President Barack Obama and members of Congress about addressing issues faced by parts makers.

"We have had constructive conversations with Treasury and elected officials in Washington, but no official request has been submitted at this time," said Bob McKenna, chief executive officer of the manufacturers association, said in the statement. "Suppliers now face unprecedented challenges that have created a crisis in our industry with consequences for the nation's economy as a whole."

The Original Equipment Suppliers Association's Andrea acknowledged the U.S. supply base is in need of downsizing as General Motors Corp. (GM), Ford Motor Co. (F) and Chrysler LLC race to downsize as part of survival plans.

But allowing cash-starved companies to go bankrupt within weeks will lead to a chaotic chain of events rather than an orderly reorganization of the industry, Andrea said. Auto suppliers are making their case to a bailout-weary public and government.

The $25.5 billion in needs outlined by the supplier group would outdo the $17.4 billion bailout for GM and Chrysler awarded by the Bush administration after high-profile hearings on Capitol Hill and a rejection by the Senate.

GM and Chrysler have until March 31 to prove they can become viable without government aid or risk losing the money.

Auto suppliers, though less high-profile than Detroit's auto makers, comprise a much larger economic machine. Auto suppliers employ around 600,000 U.S. workers, roughly three-quarters of the nation's automotive industry employment, according to a Chicago Federal Reserve study.

In a request dated Monday, the suppliers ask for $7 billion in federal funds to create a "quick pay program" to help auto makers make payments within 10 days of receiving parts, instead of the 45 days or more they typically take to pay.

The group also wants $10.5 billion to guarantee receivables of suppliers whose customers have taken federal loans, which means GM and Chrysler. The guarantee would provide a backstop to commercial-lending losses on loans to suppliers. Lastly, the suppliers want $8 billion in direct access to federal loans.

-By Sharon Terlep; Dow Jones Newswires; 248-204-5532; sharon.terlep@dowjones.com.