Auto parts aftermarket companies have battled in recent years to avoid economic disaster as they navigate rising inflation, increased interest rates, and consumers who are cautious with discretionary spending.
Auto parts stores and suppliers have sought out-of-court restructurings, and sometimes bankruptcy filings, with both situations often leading to store closings.
💵💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletter💰💵
One of the most popular auto parts chains on the market is struggling auto parts retailer Advance Auto Parts, which operated nearly 5,000 retail stores.
Related: Popular trucking auto parts chain closing, no bankruptcy yet
The auto parts chain accelerated its strategic turnaround plan to close 727 corporate-owned and independent locations, as well as four West Coast distribution centers, by the end of March.
Advance Auto Parts operates 19 market hub stores and plans to open 10 more in 2025. The company plans to accelerate market hub store openings in 2026 and target a total of 60 locations by mid-2027.
The auto parts retailer completed the sale of auto parts wholesaler and distributor Worldpac for $1.5 billion on Nov. 1, 2024.Â
The retail chain, however, did not file for bankruptcy and continues to operate.
Several auto parts companies, however, filed for bankruptcy last year.
Auto parts companies file for bankruptcy
Wheel Pros, which operates as auto parts distributor and retailer Hoonigan, filed for a prepackaged Chapter 11 bankruptcy on Sept. 9, 2024, to hand 85% of its new equity interests to holders of first-lien claims and the remaining 15% to new first-lien lenders who will backstop the debtor’s exit term loan.
The debtor’s restructuring plan would eliminate $1.2 billion in debt and provide about $570 million in new capital through an exit facility.
Accuride Corp., another top manufacturer of wheels and wheel end products for commercial trucks and trailers filed for Chapter 11 bankruptcy protection on Oct. 9, 2024, seeking a consensual restructuring of its debt to continue operating as a going concern.
Marelli considers all options for financial restructuring.
Image source: Shutterstock
Marelli reportedly considers filing bankruptcy
Finally, global auto parts supplier Marelli Holdings, which is owned by KKR, is contemplating filing for Chapter 11 bankruptcy in the U.S., unnamed sources told Kyodo news agency, according to Reuters.
Related: Classic auto parts company files for Chapter 11 bankruptcy
Marelli, a key supplier to Nissan Motor and various auto parts aftermarket retailers, is considering filing for bankruptcy protection to continue operating its business in case its restructuring negotiations with its creditors collapse.
More bankruptcy:
Iconic auto repair chain franchise files Chapter 11 bankruptcyPopular beer brand closes down and files Chapter 7 bankruptcyPopular vodka and gin brand files for Chapter 11 bankruptcy
Marelli is seeking to secure new financing and plans to operate as usual while discussions continue.
The auto supplier, which formed in 2019 with the merger of Calsonic Kansei and Magneti Marelli, provides auto parts for vehicle interiors, lighting, electronics, propulsion, exhaust, chassis, and thermal systems.
KKR purchased Calsonic Kansei in 2017 and Magneti Marelli in 2019, and merged them to create Marelli Holdings in 2019.
Marelli has faced financial distress over the last three years as it in 2022 filed for an out-of-court turnaround alternative dispute resolution in Japan, which is overseen by the Japanese Association of Turnaround Professionals, according to LegalOne Global Limited.
The auto parts company, whose headquarters are located in Saitama, Japan, with North American headquarters in Southfield, Mich., at the time of its Turnaround ADR application, owed $9.5 billion in debts.
Marelli was not able to obtain the required unanimous support from all of its creditors to proceed with its turnaround plan.
The case was transferred to civil rehabilitation proceedings in the Tokyo District Court, where the company sought a process under simplified proceedings available under the Civil Rehabilitation Act.Â
The case, which reportedly was the first one transferred to the simplified civil rehabilitation proceedings, closed successfully, LegalOne Global reported.
Related: Another huge auto parts brand files for Chapter 11 bankruptcy
