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German car seat maker Recaro Automotive has announced that Recaro Automotive GmbH, headquartered in Kirchheim and Tektronix, has filed for bankruptcy with the Esslingen District Court.

According to the data, Recaro Automotive is a leading car seat manufacturer in the world, producing ergonomic and sports seats for well-known automakers such as Aston Martin, BMW, Ford, Lamborghini and Mercedes-Benz. In addition, the company makes seats for substitute seats on the football field, which makes seats for Stuttgart Football Club.

Recaro Automotive parent company Recaro Group was first founded in 1906, engaged in the manufacture of carriage carriages, then worked closely with Porsche to build prototype cars for the Beetles and then body panels for Porsche's first sports car, the Porsche 356s. In 1963, founder Wilhelm Reutter sold the body design factory to Porsche, switched to car seat design and manufacturing, and has focused on the industry ever since. Recaro Automotive stated that the bankruptcy proceedings were limited to Recaro Automotive GmbH and did not include any other group companies. It is understood that Recaro Group has a wide range of business, covering aircraft seats, game seats, child safety seats, train seats and other areas, these companies have not been affected by the bankruptcy.

Recaro Automotive did not explain the reasons for the bankruptcy in an official statement. Professionals believe that the lack of business diversification and reliance on a small number of customers may be a key risk factor. Another reason may be that the auto supplier industry as a whole is under pressure, with weak market demand and the transition to electric vehicles, especially for "small but beautiful" companies such as Recaro Automotive.

The electrification transformation of automobile industry has a great impact on traditional automobile enterprises and supply chain. Electric car parts research and development requires a lot of money, while some European companies need to maintain a leading position in the field of traditional fuel vehicles, which means double investment in two sets of technology platforms. In Europe, however, overall car sales are still at an all-time low because of the slow popularity of electric vehicles. In addition, the profit margins of traditional auto parts suppliers are also declining, making it difficult for companies to achieve revenue and profit growth. Due to fierce market competition and difficult electrification transformation, multinational parts giants will carefully consider every expenditure.

In the outside world, due to the impact of multiple factors, such as the weak European economy, high inflation, and the surge in costs brought about by the transformation of electric intelligence, these traditional auto parts supply giants are facing a sharp increase in operating pressure. there is an urgent need to reduce costs, especially after 2024, German auto parts giants have taken more frequent layoffs and more and more head suppliers have joined the wave of layoffs.

Earlier, the latest figures released by Falkensteg, a German consultancy, showed that 20 German auto parts suppliers with annual revenues of more than 10 million euros filed for bankruptcy in the first half of 2024, an increase of 60 per cent year-on-year. It is understood that in the business sector, including the automobile industry, a total of 162 companies with annual revenues of more than 10 million euros filed for bankruptcy in Germany in the first half of the year, an increase of 41 percent over the same period last year, with real estate, automobile supply chain and machinery manufacturing being the hardest hit.

Although the giants in the auto parts industry are more able to withstand risks, they all choose layoffs to reduce costs and increase efficiency to cope with the cold winter of the industry, including Mobil, mainland China and Bosch. A few days ago, Zaifu Group, a German auto parts supplier, announced that it expects to cut about 11000 to 14000 jobs in Germany by the end of 2028, accounting for about 1/4 of its total German workforce. According to ZF's official news, the layoff plan is aimed at reducing costs, improving competitiveness and freeing up resources for the company's future development in the electrification field.

There is no doubt that all large parts suppliers need to face the transformation of electrification and intelligence, which is very expensive. At the same time, the initial profit of the electric vehicle business is far from that of the traditional fuel business, and orders will decrease as the trend of electrification in Europe slows. Based on this, some industry insiders predict that the number of bankruptcies of German car suppliers may further increase in the second half of the year, due to the decline or postponement of demand for internal combustion engine technology, as well as the pressure brought by factors such as energy price surcharge and inflation compensation. Traditional drive technologies are facing greater challenges.

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