Another automotive company has filed for bankruptcy protection.
The news has raised concerns among economic experts that the United States could face a financial crisis reminiscent of the 2008 meltdown.
First Brands, a manufacturer specializing in filters, brakes, wipers and lighting systems, filed for Chapter 11 bankruptcy protection on Sunday night.
The filing represents the latest in a series of automotive industry failures that have economists watching carefully for signs of broader economic distress.
The bankruptcy follows just two weeks after subprime auto lender Tricolor Holdings went bankrupt and ceased operations, per reports.
In June, Marelli, a supplier for major automakers Nissan and Chrysler, also filed for Chapter 11 bankruptcy protection.
Industry analysts point to car loans as the potential trigger for economic trouble.
The car loan market has reached $1.7 trillion, making it the second-largest consumer debt category after mortgages.
While smaller than the $10.6 trillion mortgage debt that preceded the 2008 financial crisis, experts warn the automotive debt could still generate significant economic problems.
The automotive loan situation presents particular concern because lenders are extending credit to buyers who are financially strained.
Americans are earning less in inflation-adjusted terms and facing increasing difficulty meeting their financial obligations.
This has pushed lenders to approve riskier loans to maintain sales volume, according to reports.
Millions of Americans have fallen behind on subprime car loans.
Experts view these delinquencies as potential early indicators of more extensive debt problems that could eventually spread to mortgage defaults.
The Daily Mail reported that Erin Witte, director of consumer protection at Consumer Federation of America, explained the severity of the situation for vulnerable borrowers.
“Low-income car buyers are getting hit the hardest right now,” Witte said.
“In the Tricolor collapse, many borrowers suddenly lost access to their cars, their trade-ins weren’t paid off, and messy loan transfers could even lead to wrongful repossessions or damaged credit.”
Witte added, “It shows just how fragile the auto finance market has become.”
David Whiston, an analyst at Morningstar, identified affordability as the primary concern.
“The biggest issue is affordability,” Whiston stated. “And the big question mark is how much tariff costs will get passed to consumers.”
The Daily Mail further noted that President Donald Trump’s 25 percent automotive tariffs have added pressure to an already strained market.
Major automakers have attempted to shield customers from the import tax by absorbing billions of dollars in costs.
GM estimates paying between $4 billion and $5 billion this year, while Ford expects a $2 billion impact.
Rather than immediately raising vehicle prices, manufacturers have absorbed costs or reduced their workforce.
This comes despite vehicle prices already climbing 30 percent since 2019.
The average new vehicle now sells for $49,968, resulting in typical monthly payments exceeding $750.
More than one in five buyers pay over $1,000 monthly.
Kevin Roberts, director of market and economic intelligence at CarGurus, noted the pricing trend. “Average new vehicle prices have been flirting with the $50,000 mark for the last year,” Roberts said.
The financial burden has led to 1.6 million Americans losing their vehicles to repossession last year. Additionally, repair costs jumped 15 percent in August, compounding the financial strain on vehicle owners.
Automakers continue raising prices for 2026 models.
Ford tacked $2,000 onto the price of their Mexican-made cars. Subaru issued a 16 percent price hike on a base model for 2026.
Volkswagen followed suit with its own increases.
Dealerships have joined the price increases, with 82 percent reporting raised prices on their lots in August, according to a survey by SuretyNow.
Mark Templin, Toyota’s chief operating officer for North America, warned in May about the unsustainable nature of current business practices.
“Business is not sustainable longer term without significant price increases,” Templin stated. “And the industry already has an affordability problem.”
