Auto Parts Distributors NAICS 423120

Oct 15, 2025 - Major Auto Parts Maker Goes Bankrupt

• First Brands Group, a major US auto parts supplier known for Fram and Raybestos brands, has filed for Chapter 11 bankruptcy, citing $10 to 50 billion in liabilities mainly from years of aggressive expansion. While primarily serving the aftermarket sector, its collapse could ripple through the industry, potentially causing supply disruptions, higher retail prices, and increased pressure on other suppliers with similar debt levels. US tariff policies have added to the complexity, which was already causing significant financial strain throughout the automotive industry. Other ramifications include retailers facing possible inventory gaps, and consumers could see higher prices as companies steer through the ups and downs of a constantly moving trade policy. The First Brands bankruptcy underscores the vulnerability of the US auto parts sector to both financial missteps and an ongoing American trade war.
• Both sales and the inventory to sales ratio for auto parts wholesalers showed signs of weakening in early 2025, per the US Census Bureau, as Trump’s automotive tariffs began to bleed into results. Industry revenue fell 4.8% year over year in February 2025, while the sales to inventory ratio rose 3.2% from the previous month, indicating wholesalers have too much inventory after stockpiling parts to get ahead of tariffs. The industry faces headwinds going into the latter half of 2025 now that 25% tariffs on Mexican and Canadian auto parts imports are in full effect. There is no such thing as an automobile fully made in the US. Virtually all cars contain parts from Mexico and Canada, and billions of dollars worth of auto merchandise crosses North American borders every year. Industry analysts expect tariffs to increase a car’s price by an average of $3,000.

• A US trade war with China is affecting car manufacturers in numerous ways, with one of the most challenging being China’s near total control over rare-earth magnets necessary for electric vehicle (EV) manufacturing and certain traditional car systems (and virtually all other electronics). China controls 90% of rare earth metals such as dysprosium and terbium, elements used in magnets so they operate at high temperatures. Exports of rare-earth magnets from China have all but halted since April amidst the tariff squabble with the Trump administration. Auto manufacturers worry they can’t keep production lines moving without the magnets and might have to shut down production. Some are considering outside-the-box solutions including shifting all engine production to China, or shipping American-made EV engines to China so the magnets can be installed. Any of those options will run afoul of Trump’s trade goals and would significantly increase costs already high due to tariffs.
• Struggling retailer Advanced Auto Parts is aggressively moving on a corporate restructuring in early 2025 to turn around years of floundering sales and ranking fourth among its competitors. Its closing of 700 corporate-owned and independent stores represents 10% of corporate locations and 20% of indies. It is also closing four distribution centers and simplifying its supply chain from big distribution hubs to smaller regional hubs in order to get the vast amount of parts the company must carry to customers as quickly as possible. With recession worries looming, auto parts retailers typically benefit from consumers putting off new car purchases in favor of repairing a current vehicle. But the trade war between the US and its North American neighbors is a wild card that could increase costs and blunt any gain to be had in the auto parts industry.