Changing market trends are forcing automakers to navigate rough waters as they adjust to the changing climate in EV adoption and lingering effects of the COVID-19 pandemic. However, it can be easy to forget that automotive suppliers have also been feeling the heat with some of them being forced to file for bankruptcy. Recaro Automotive and BBS are the two latest suppliers to be forced to enter these proceedings for varying reasons.
Recaro Automotive stuns the world with bankruptcy
Recaro Automotive surprised many with its filing for bankruptcy in a German court.
Recaro is a name that has rapidly become associated with seats. Whether in your car, on an airplane, or even at your desk chances are good that you sat in a Recaro-constructed seat at least once in your life. The bankruptcy filing came to light in a recent report that was released by Automobilwoche with the company filing it in the Esslingen District Court on July 29th. The bankruptcy came as a surprise not only to Recaro’s employees, but also IG Metall a major trade union in Germany.
“What this means for the 215 employees of Recaro Automotive GmbH in Kirchheim is unclear,” said the union, according to Automobilwoche. “We expect all options to be exhausted in order to secure jobs and find a sustainable solution.”
The works council was also disappointed in Recaro Automotive’s decision to file for bankruptcy saying that the employees waived and deferred wages to help keep the company stable during the pandemic and the challenges that emerged as the world began to return to normal. It’s important to note that Recaro itself has a presence in other industries and the bankruptcy is centered exclusively on the automotive side of the business with the fallout not impacting the rest of Recaro’s operations just yet though this might change if the company is forced to do a more comprehensive restructuring plan.
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BBS files for insolvency….again
Troubled wheel manufacturer BBS Automotive filed for insolvency for the fifth time in recent years.
In addition to Recaro Automotive filing for bankruptcy, wheel manufacturer BBS also filed for insolvency. Unlike Recaro’s proceedings, BBS’s filing at the Rottweil District Court is the latest in a long string of trouble for the company with this filing being the fifth time that BBS has filed for insolvency with the company applying for it four other times in 2007,2010, 2020, and 2023. ISH Management Services (the company which acquired BBS Automotive GmbH prior to this latest bout of financial trouble) released a brief statement saying “We will never let down the people who have walked this path with us. We will never give up on the BBS brand, which for us is one of the biggest German global brands. We have a plan and we are determined to implement it.”
Unsurprisingly, IG Metall was not pleased with this filing either saying that they were also surprised by this decision and even took a swipe at BBS’s management saying that they were puzzled by their behavior. Look for more automotive suppliers to potentially follow Recaro Automotive and BBS’s respective leads in the future as they attempt to navigate a changing automotive landscape where inflation and shifting consumer demand are putting a squeeze on their budgets.
You can squeeze just so hard.