Recaro’s Loss of a Major Contract Led to Bankruptcy. Who Was It?

Recaro’s recent bankruptcy announcement was a stunner. After all, vehicles need seats and since 1906, Recaro has been producing them. Whether it’s as an OEM supplier or aftermarket brand, Recaro has become synonymous with automotive seats the same way Brembo has with brakes. Retrofitted sport seats, shell seats, seats with speakers, composite and plastic materials, Alcantara and fabrics, motorsports, off-roading, office chairs—if Recaro wasn’t the first to create it, rest assured the German manufacturer would further innovate it. Outside looking in, Recaro appears to have had a seat at every automotive table. So, what happened?

In a statement to The Drive, a Recaro spokesperson said, “The company encountered significant financial difficulties due to extreme price increases in recent crisis years and the loss of a major contract. The effects of legacy products and business operations impacted the development of new product offerings during a regional reduction in vehicle purchase spend.”

Rising costs have affected all industries. Everyone has felt the pinch. However, the “loss of a major contract” portion of that statement might’ve hammered that final nail into the Recaro coffin. Per the company, the insolvency filing is specific only to Recaro Automotive GmbH and has no bearing on other subsidiaries, including Recaro Automotive North America. 

The Recaro Group employs more than 2,600 employees worldwide, approximately 425 of whom work for the automotive division. Other divisions include aviation, rail, gaming, child safety, and specialty, which would include lifestyle applications like office chairs, entertainment venues, and marine craft.

Now who is the big bad wolf? Of course, Recaro won’t say, citing client confidentiality and privacy concerns. But we’re going to guess anyway, and I’m putting my freshest, least crumpled dollar bill on the Volkswagen Group. Why not bet more? Maybe if inflation weren’t a thing. Just because I lived in Vegas doesn’t mean I spent time at the casino. (More like happy hour at PKWY Tavern, IYKYK.)

OK, why V-Dub? Looking at Recaro’s own list of cars it’s supplied seats for, there are a whole lot of discontinued models on there. But among the VW Group entries, a big proportion are vehicles that have recently been discontinued or are about to go away—namely, the Audi R8 and Porsche 718. All eight Audis listed, in fact, are variants of the defunct R8 while out of the seven Porsches listed, three are 718s. Neither of these vehicles were high-volume products, but don’t forget the motorsport side of things.

In the last couple of years, Audi has dropped or shifted its motorsports monies to focus on Formula 1. The automaker once left Formula E for the Dakar Rally. The Quattro brand also closed up shop on factory-supported Audi Sport racing teams in GT3 programs. Additionally, Sportscar365.com reported the sales stop of GT2, GT3, GT4, and TCR models in the early part of 2024.

Again, not a massive amount of sales compared to the Toyota Corollas of the world, but the quick disappearance of luxury consumer and ultra-high-end motorsports vehicles for the VW Group could hurt suppliers like Recaro quite a bit. And VW Group has been looking to cut costs everywhere it can—even banning certain corporate leases.

Will Recaro ever confirm or deny this? Extremely unlikely. But what’s your take on who put Recaro in the hot seat?

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