Auto Parts Distributors NAICS 423120

Feb 10, 2026 - First Brand Customers Throw Company a Lifeline

• Auto parts supply giant First Brands Group is unraveling after its Chapter 11 filing, weighed down by $10-$50 billion in liabilities from years of aggressive expansion and alleged executive misconduct. Court filings indicate management allegedly double-pledged receivables and even made up invoices to pad collateral, which pushed the company into a cash and shareholder crisis. With its lenders refusing to put up more money, First Brands turned to its biggest customers (Ford, GM, Harley-Davidson, and others) which prepaid for orders worth $48 million just to keep critical operations running. Even so, the company has shut down 17 North American facilities, idled roughly 4,000 workers, and faces pressure to sell off pieces of the business. For auto parts wholesalers, the mess is a warning shot that weak controls and financial shenanigans can quickly blow up a supply chain for retailers and consumers; especially in an industry facing stiff tariffs.
• Both sales and the inventory to sales ratio for auto parts wholesalers showed signs of weakening in 2025, per the US Census Bureau, as Trump’s automotive tariffs are cutting into results. Industry revenue fell 1% year over year in July 2025, while the sales to inventory ratio fell 8% from the previous month, indicating wholesalers have too much inventory after stockpiling parts to get ahead of tariffs. The industry faces significant headwinds 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 say that tariffs 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.