Recaro rescued by Italian supplier, production moves to Italy

Recaro Automotive GmbH, the renowned German manufacturer of car seats, has been acquired by Italy’s Proma Group, signaling a major shake-up for the company. As part of the acquisition, production will cease in Germany and move to the Turin region, permanently closing the current site and leaving more than 170 employees without jobs.

Proma Group is an automotive supplier specializing in seat structures, body assemblies, and chassis suspensions. It took over Recaro following the latter’s bankruptcy filing earlier this year. While the Italian firm will relocate the core manufacturing operations to Italy, it plans to retain several members of its sales and engineering teams.

Restart scheduled for 2025

Recaro, a brand synonymous with high-performance car seats, has been a staple in sports car interiors for decades. However, the company faced financial struggles following losing a major contract, culminating in bankruptcy last summer. With Proma’s financial backing, Recaro is set to restart production in January 2025, aiming to re-establish its presence across the European market.

While the takeover ensures Recaro’s survival, the repercussions for its German workforce are significant. IG Metall union confirmed that over 170 employees would lose their jobs. The existing operations in North America and Japan will continue without disruption, maintaining agreements with current clients and suppliers. OEM production, however, will now be managed directly by Proma Group in Italy, marking a new chapter for the storied brand.

Broader pressures in a fragile market

The automotive industry has been grappling with supply chain challenges, and Recaro’s struggles indicate broader pressures in the sector. Bosch is in the process of cutting 5.500 jobs, and a similar number was made redundant at Schaeffler, with comparable scenarios having surfaced at Valeo and Continental.

The supplier crisis ripples through the production halls. One of Recaro’s key clients, Ineos Automotive, faced delays earlier this year due to seat supply shortages. Ineos CEO Lynn Calder has reported a recovery trajectory, with plans to have over 20,000 Grenadiers on the road by the end of the year.

The shift in production to Italy, intended to streamline operations, doesn’t come as a complete surprise. Inefficient assembly processes were cited as one of Recaro’s weaknesses. However, as one of the household names in the sector, the brand has the potential to rebuild its position as a leader in automotive seating solutions if it succeeds in moving away from its overly strong dependence on too few customers. Losing one of their major contracts directly led to the insolvency crisis.