TOKYO -- Japanese automotive supplier Marelli Holdings' skid into bankruptcy -- its second in three years -- shows the risks of its continued dependence on Nissan Motor.
Marelli filed for Chapter 11 bankruptcy protection in the U.S. in June after negotiations for a private debt workout stalled.
Marelli's predecessor was Calsonic Kansei, the largest parts supplier in Nissan's network of affiliated companies, known in Japan as a keiretsu.
Because of the company's central role in the supply chain, it was initially exempted from the automaker's plan in the late 1990s -- under then chief Carlos Ghosn -- to break up its keiretsu.
In 2017, U.S. private equity firm KKR acquired Calsonic Kansei, removing the company from the keiretsu. Then in 2019, KKR merged Calsonic Kansei with Magneti Marelli, the Italian parts supplier acquired from Fiat Chrysler Automobiles.
The newly formed Marelli was meant to become a mega supplier, while the name change to the internationally recognized brand was supposed to underscore the shift away from Nissan.
Yet Nissan and Fiat Chrysler's successor Stellantis still account for the majority of Marelli's business.
"If one of our small or midsize suppliers goes bankrupt, Nissan's own production could come to a halt," said a source familiar with Marelli's inner workings.
In one example, the driver seat cockpit modules Marelli supplies to Nissan are produced at dedicated production lines set up within Nissan plants.
Given this high level of exposure, poor sales at Nissan and Stellantis have a direct hit on Marelli earnings.
Marelli tried to branch out into new businesses but struggled during the COVID-19 pandemic as auto production slowed to a crawl. Marelli filed for court-led rehabilitation in Japan in 2022.
Efforts to turn Marelli around now are expected to take several years to contribute to profits. For the time being, it will continue to rely on Nissan and Stellantis. During a briefing in June, Hiroki Hasegawa, Nissan's corporate executive in charge of purchasing, said the automaker would cooperate with Marelli's rehabilitation.
But with Nissan and Stellantis suffering their own earnings slumps, Marelli's woes could drag on.
Marelli is the latest example of a Nissan supplier being unable to wean itself off group transactions even after severing capital ties with the automaker.
Unipres, a major Nissan supplier, posted a net loss of 21 billion yen ($142 million) for the fiscal year ended March 2025. Fellow supplier Kasai Kogyo is also mired in losses.
Seiji Sugiura of Tokai Tokyo Intelligence Laboratory notes that Marelli faces a shortage of necessary sales staff. Because of its dependency on Nissan, it struggles to be aggressive in price negotiations.
According to Teikoku Databank, 32 Japanese auto parts manufacturers went bankrupt in fiscal 2024, up 33% from the previous year. This marked the highest level of bankruptcies in the last 10 years and the third straight year of increases. About 80% of bankruptcies were small enterprises with less than 500 million yen in liabilities.
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