Automotive parts maker Marelli, which is owned by private equity firm KKR, is currently negotiating with lenders about debt proceedings, with a potential buyout from Motherson Group being discussed.

Marelli technology on display at the Shanghai International Automobile Industry Exhibition earlier this year.

Marelli technology on display at the Shanghai International Automobile Industry Exhibition earlier this year.

Source: Marelli

The reported bankruptcy filing would allow Marelli to continue to supply Nissan, Stellantis and other OEMs with components while it sources additional financing.

According to a report by Japanese news agency Kyodo, parts supplier Marelli may be considering filing for Chapter 11 bankruptcy with US courts. Referencing sources close to the company, Kyodo said this move would allow the Italian-Japanese tier one supplier to continue supplying OEMs, such as Nissan and Stellantis, as normal while sourcing more financing.  

Marelli is owned by US private equity firm KKR, which first purchased Calsonic Kansei from Nissan Motor for 500 billion yen ($4.5 billion) in 2016. Through Calsonic Kansei it then purchased Magneti Marelli from Fiat Chrysler Automobiles (later Stellantis), in 2019 for $7 billion, merging the two tier one suppliers into one company under the Marelli name. It remains a key supplier to both Nissan and Stellantis, covering everything from lighting and interior components to propulsion, exhaust and chassis parts.  

The Chapter 11 filing would allow Marelli to continue business operations while it discusses restructuring and further financing options with creditors, including potential buyouts. Markets news source Nikkei reported that Indian supplier Motherson Group is one such bidder, with Marelli leadership sharing details of Motherson’s offer to its debt holders in late May, to mixed support.  

In a statement to Nikkei, the company said: “Marelli is in active discussions with lenders to secure additional financing to address a temporary working capital gap. We continue to operate as normal while these discussions are ongoing. We remain confident in our ability to reach an outcome that ensures Marelli continues delivering the best advanced solutions for its customers.” 

This is the second potential restructuring effort by Marelli in the last few years. It previously sought debt negotiations in 2022, with sources revealing to Bloomberg a debt total of $9.5 billion. The sources pointed to poor recovery from the Covid-19 pandemic, which saw Marelli plants shutdown, as being a key factor to the debt. Chairman Dinesh Paliwal also commented that the supplier had “the highest fixed cost among our competitors”, as being another cause for the economic trouble – although it remains to be seen if this is still the case.

Shake-ups among tier one suppliers can cause major disruption for OEMs who need to shore up resiliency wherever possible. Automotive Logistics recently sat down with Gerardo de la Torre, regional senior director of supply chain management (SCM) at Nissan Group of the Americas, to discuss the carmaker’s new strategic playbook for SCM. Its multi-pillar approach can help mitigate shocks and help the company “get it right” while remaining agile. As de la Torre discusses, tier-n visibility through digital tools is vital in managing supplier relationships, which may prove key in situations like this. 

Read the full interview here  

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