Unpleasant surprise that Recaro has reportedly filed for bankruptcy
You read that right, folks. Recaro, the fabled sports seat manufacturer has, reportedly, filed for bankruptcy. Various outfits have used insolvency to describe the seatmaker’s current state – that is to be unable to pay debts on time – while others used bankruptcy which carries into a legal process after declaring a total inability to pay off debts and obligations. What does this all mean, then?
Recaro’s fate unclear, but here’s what’s been said so far
Photo: Recaro
First, a bit of context. Recaro Automotive GmbH has filed for bankruptcy, but the brand Recaro itself is doing fine. Automotive has not been a part of or under its parent company for about 13 years now. This follows its sale to Johnson Controls (JC) in 2011. As Johnson Controls separated its automotive line, it came under Adient’s ownership, which is still technically under JC. In 2020, it (Recaro Automotive) was purchased by Raven Acquisitions, a private equity firm based in Detroit.
Photo: Recaro
Allegedly, the company started its financial struggles after the move to Adient. It wasn’t in dire straits, but it was said that it was operating on a break-even status. For any business, consistently breaking even is never a good thing. This is despite the declaration of an approximated USD 150M in revenue in 2019. Yes, the name is there, it is familiar, it is well-loved, but having been acquired from a private equity firm means that its existence under the umbrella will depend greatly on how much finances are “invested” into a/the brand.
We bucket- and reclining bucket seat-riding folks are many, but we are still a niche audience in the greater scheme of things. That said if a brand under the parent company or umbrella does not do as well as others, it’s likely that financing slows down or worst of all, grinds to a halt. That is what may have happened here.
Photo: Recaro
To make matters worse, it has been alleged that employees were not aware of the company’s financial state, and with the filing of bankruptcy, that means jobs and livelihoods are at stake in the financial woes. Brands such as BMW, Ford, Honda, Porsche, and even Volkswagen were being supplied by Recaro Automotive and with this development, whatever seats you might have now might be the last. At least that’s until more light is shed on the matter since the company has been approved for self-administration according to a court in Germany.
One thing worth mentioning as contributing to this predicament is the rise in replicas. These knock-offs have become very close clones to the originals and many opted to buy them for much cheaper than the originals that demanded hefty costs. Of course, the quality, safety, and durability are compromised with these replicas but because of how close they’ve come to resembling the originals, people who don’t know better wouldn’t know better that they’re fakes, right?
This is a developing story and added information will inevitably make its way through the grapevine. We’ll keep you all abreast of what happens to Recaro Automotive as soon as we know more.
