Sports car seating supplier Recaro files for bankruptcy in Germany

Legendary sports car seating supplier Recaro Automotive Seating filed for insolvency in Germany — the equivalent of Chapter 11 bankruptcy protection in the U.S. — on July 29.

Recaro still has an excellent reputation in the auto industry, but its future is uncertain with the bankruptcy filing. 

On Recaro's homepage, rally legend Walther Röhrl advertises the brand as a partner. Even in his first racing cars, such as the BMW 2002 tii or the Porsche 911 S, Röhrl sat in the seats of the German manufacturer. He has sworn by their quality ever since.

The company's roots go back to 1906, when 32-year-old master saddler Wilhelm Reutter founded Stuttgarter Carosserie und Radfabrik. 

In 1965, the company, based in Kirchheim unter Teck in Germany, presented its first car seat, characterized by firm lateral support and foam padding. Two years later, the first bucket seat for sporty driving followed that many people still associate with the brand.

Its innovations include lightweight construction and special ergonomics.

Many manufacturers have relied on Recaro, especially for their sporty models — but usually as optional equipment.

According to Recaro, these include Audi, Aston Martin, BMW, Mercedes, Cadillac, Ford, Mazda, Porsche and Renault. Sony has Recaro seats in its Afeela concept car.

However, there are apparently hardly any new orders. Ineos Automotive is the only manufacturer currently using Recaro in series production. Its Grenadier is in the ramp-up phase.

Recaro also builds seats for classic cars in its Classic Line, and special comfort seats. The company is also known for trainer and replacement benches in soccer stadiums.

Recaro is backed by American investment company Raven Acquisition in Detroit, which took over the Recaro business from Adient in 2020. Adient, a spinoff of the car seat division of Johnson Controls Inc., acquired Recaro Automotive in 2016.

The 2020 takeover established that the new company structure would allow Recaro Automotive to better focus on its core business — performance seats, ergonomic seats and special applications. Decision-making processes were to be shorter and the company would be able to act more flexibly to meet market demand.

However, according to data service provider Northdata, Recaro reported losses in the millions in both 2021 and 2022 annual financial statements. The company was hurt by the COVID-19 pandemic, as well.

Recaro's union, or works council, blames mismanagement for the company's failure.

“They have failed to open up new markets,” works council Chairman Frank Bokowits told Automotive News sibling publication Automobilwoche.

New ideas such as greater individualization of seat production and expanding the product line to include rear seat benches or door panels for classic cars, for example, were never tackled. “There is also good money to be made in the aftermarket, but you have to do something about it,” said Bokowits.

Recaro employs 425 people at its sites in Germany, the U.S. and Japan. Over several years, employees have contributed to stabilization by waiving and postponing raises, according to the IG Metall trade union.

“We've had a tough time, and our trust in the management is correspondingly low at the moment,” says Alessandro Lieb, a German union representative in Esslingen.

The company has given assurances that its July payroll will be processed in the next few days. Monthly salaries are then to be secured via the insolvency process, which generally takes three months.

It's unclear what happens next. Insolvency administrator Holger Blümle is expected to examine the company's financial situation over the next few days and monitor the management.

Bankruptcies are on the rise in the automotive supply chain, according to experts, who say even more companies could run into problems.