First Brand Sputters Out of Control

The American automotive industry, strained by tariffs, regulatory uncertainty, and years of weak performance, was hit with another setback last month. On September 29, 2025, First Brands, one of America’s largest auto groups, filed for Chapter 11 bankruptcy protection, revealing $10 billion in previously unreported liabilities.

First Brands may not be a household name to most people, however it controls a portfolio of brands that play a major role in the automotive  automotive industry. From Phillip’s Lighting to Michelin Tires, and a whole host of lesser known brands,  the group was certainly an important player in the industry. Starting as Crowne Group, it acquired multiple companies, these acquisitions were financed using debt. Then the company rebranded  itself as First Brands in 2020 by owner Patrick James,  with 24 companies under its group.

First Brands’ business model was simple. Offer parts to older cars at a fraction of standard dealership prices . The company used a method of financing known as factoring-collecting sales income faster than paying suppliers. This should have been seen as a  red flag, however, investors chose to ignore the signs as they managed to raise $6 Billion in corporate loans, helped by other companies, such as UBS and Jeffries. Abuse of factoring, can lead to misleading financial statements which raises regulatory concerns.

The fallout was severe enough to warrant an investigation by the U.S. Department of Justice , given the  speed of the collapse. Furthermore, analysts suggest that a total of $2.3 Billion disappeared without a trace.. Investors have poured in an additional $1.1 Billion to ensure operations continue. 

The fall of a company with such an important role in the industry could spell disaster for a whole host of groups. Consumers will almost certainly see costs rise in the future. Companies involved in car manufacturing in the U.S. might  struggle . President  Trump’s tariffs make it harder to import and export goods, a necessary part of the manufacturing. .

The fall of First Brands threatens Walls Street. Following Tricolor, this is another example of financial mismanagement in the U.S. in recent years. With investors already concerned about a wider economic fallout, the first domino has fallen, and the full scale of the damage may only become clear over time. 

Sources:

Vestal, S. J. (2025, October 10). First Brands: Why a maker of spark plugs and wiper blades has Wall Street worried. The Guardian. https://www.theguardian.com/business/2025/oct/10/first-brands-wall-street

Azhar, S., Sen, A., Spector, M., & Tiwary, S. (2025, September 29). First Brands files for bankruptcy, revealing billions of dollars in liabilities. Reuters. https://www.reuters.com/markets/us/auto-parts-maker-first-brands-files-bankruptcy-protection-2025-09-29/

Ionanalytics. (2025, September 26). First Brands’ financial tune-up raised red flags that Wall Street overlooked. Debtwire Insights. https://ionanalytics.com/insights/debtwire/first-brands-financial-tune-up-raised-red-flags-that-wall-street-overlooked/