Sounds like their customer is QS-9000 registered and discovered the C9 interpretation that states all subcontractors must be ISO 9000 registered by the end of this year. I believe this is the only automotive specific mandate that would directly affect a tier-2.
See
www.qs-9000.org for details. There are also a couple other threads about this change on this board - QS-9000 forum I think.
Their customer runs the risk of an audit nonconformance if their supply base does not conform to the new requirement. The customer can request a waiver from the end customer, or perform a second party audit. Appendix I (point 4) also gives an "out" for small suppliers, but again their customer must decide which way to go.
If the customer wants to work with them they may be able to get the system done without an iterrruption in business. If the customer has an alternative source that is already ISO, they could be in trouble. I had a client with the same issue beginning of last year - they started losing business (calibration) because they ignored the ISO Guide 25/17025 mandate of QS-9000. Customers started calling in early 2001 because they were getting written up on their audits. They lost a lot of business over the three month period it took us to get a system in place.
Tom