Trump tariffs claim first major victim as auto-parts giant files for bankruptcy
A car parts supplier pointed its finger at the Trump administration's tariffs while filing for bankruptcy.
Marelli, a Japanese-based car parts manufacturer, filed for Chapter 11 bankruptcy protection on Wednesday, citing tariff-related pressures that added to its years-long financial troubles.
The parts maker, which supplies components for Nissan and Stellantis, is considered a bellwether for the global auto industry.
It employs 40,000 workers across plants in the US, Europe, and Asia.
Marelli said it had already been navigating a challenging landscape of supply-chain bottlenecks and labor shortages following the Covid-19 pandemic.
But in a court filing, CEO David Slump wrote that rising global tariffs became a tipping point this spring.
'Marelli was severely affected by tariffs due to its import/export-focused business and the imposition of tariffs specifically against automotive manufacturers and suppliers,' Slump wrote in the court filing.
The company's finances began to deteriorate in March, around the same time President Donald Trump imposed 25 percent levies on imported cars and vehicle parts.
The President scaled back the dramatic import tax in April, but the temporary reprieve left suppliers facing continued uncertainty.
For Marelli, the pressure was too much.
In the Wednesday filing, the company said it secured $1.1 billion in financing from lenders, a deal that will allow it to keep factories running and maintain customer orders.
Around 80 percent of Marelli's creditors have agreed to support the plan, which includes eliminating all of its secured debt.
'This process will allow us to strengthen our business,' Fernando Vivanco, the company's chief communications officer, told DailyMail.com.
'This filing has no impact on our business or how we serve our customers. Marelli will continue to fulfill orders as usual and this process will not result in any changes to our relationship with customers, including contacts, billing or other support processes.'
Still, the bankruptcy highlights how quickly trade policy shifts can destabilize even massive suppliers — and it places new scrutiny on Marelli's biggest clients.
Nissan, America's fifth most popular car brand in the US in 2024, once owned more than 40 percent of Marelli's shares and remains heavily reliant on the supplier.
Car companies have been struggling as they negotiate their response to the President's sweeping car levies
Some manufacturers have decided to build manufacturing capacity in the US - others have had to lay off staff because of the taxes
But the automaker is under enormous financial stress of its own.
In November 2024, executives started raising alarm, saying the brand only had '12 to 14 months' of cash to survive, according to the Financial Times.
The company said it was struggling to keep up with increasingly popular Chinese manufacturers. Nissan's cars — which rely on older, less reliable parts — have continued to lose global market share.
Moody's, a credit agency that evaluates a company's loan-worthiness, sunk Nissan into 'junk' status, before the company was forced to oust its CEO.
Stellantis, which also briefly owned Marelli, is also facing pressure.
The automaking conglomerate — which owns legendary Detroit-based brands Jeep, Dodge, Chrysler, and Ram — reported a 70 percent drop in profits last year.
It also sacked its top boss.
Marelli's bankruptcy could complicate matters for both automakers as they face pressure to modernize their vehicle lineups and defend global market share.
The filing is the latest giant move from car companies that rely on American sales.
GM just announced that it is spending $4 billion to rejig factories in the US. The company previously said it was facing $4 to $5 billion annual costs in tariffs.
Multiple automakers have announced that they'll start building cars in American plants.
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