The auto industry suffered an economic downturn last year that led to bankruptcy filings and business closures.
Many distressed businesses point to many of the same issues that are causing the problems, such as labor and product costs caused by inflation, higher customs tariffs, rising interest rates, and changing consumer attitudes toward spending in uncertain times.
According to an industry expert, new car sales slowed at the beginning of the year and may continue until 2026.
“Sales slowed in the fourth quarter of last year, and that trend is expected to continue into early 2026,” Cox Automotive senior economist Charlie Chesbrough said in the company’s 2026 forecast in late January.
“The market has been slow due to ongoing concerns about the U.S. economy and persistently low new car prices,” Chesbrough said. “These market conditions are expected to be a major driver for the new market through 2026.”
And now, the auto industry is starting the year with a bankruptcy filing, which will result in the company’s demise, unless someone buys the company to revive it.
Almicrof files for Chapter 7 bankruptcy, pending a lawsuit. Shutterstock ยทShutterstock
California-based off-road racecar maker AluMiCraft LLC has filed for Chapter 7 bankruptcy relief, facing millions in liabilities, including a more than $15 million claim in a wrongful-death lawsuit, and several insurance lawsuits involving State Farm Insurance, the EDIT reported.
Allumicraft produced two off-road truck models, the Unlimited and Spec; Three off-road bogies, Class 1 AWD, Class 1, and Class 10; and three dune buggies, A2, S2, and S4.
The Santee, Calif.-based automaker filed its petition in the U.S. Bankruptcy Court for the Southern District of California on March 3, listing about $16.7 million in debts and about $22,700 in assets.
According to the petition, the lender will not have funds available to pay unsecured creditors after paying administrative costs.
The bulk of the liabilities consisted of $15.76 million in claims, including a $15.23 million judgment claim from the estate of Brian Cohen and a claim for more than $401,000 in lease payments by Split Mountain Industrial Properties.
Allumicraft listed a secured claim of more than $954,000 from Matthew Fleming, including liens on equipment, receivables, deposits, and bank accounts.
The lender’s revenue has declined significantly over the past three years, from $3.63 million in 2023 to $2.98 million in 2024, then to about $370,833 in 2025.
The lender said it does not have real estate or personal property or assets, Edt reported.
Allumicraft racers won several major off-road races in 2022, including driver Michael Meister winning the Crandon Off-Road Superbuggy Championship in September in Crandon, Wis. With the most points on the season, Allumicraft racer Mark Steinhardt finished second, according to the company’s website.
Allumi Craft Cars racers also won Class 1 and Class 10 at the SCORE Baja 500 in June 2022.
Other car manufacturers, such as electric car companies, have also faced severe economic problems in the past two years.
Nikola Corporation, a leader in the development of battery-powered and hydrogen fuel-cell electric semi-trucks, filed for Chapter 11 bankruptcy on February 19, 2025, seeking to sell its assets.
Another EV company, commercial electric truck maker Bollinger Motors, ceased operations on November 21, 2025, six months after emerging from bankruptcy, but did not file for bankruptcy protection.
The Brea, Calif., company, founded in 2015, released its B1 SUV prototype to consumers in 2017 before starting commercial production of its electric commercial truck in Oak Park, Mich., in September 2024 with its Bollinger B4.
Subsectors of the auto industry, such as auto parts companies, have also struggled, and have filed for bankruptcy protection.
Global auto parts giant Marelli Holdings Inc. filed for Chapter 11 bankruptcy on June 11, 2025, listing a $4.9 billion debt financing plan to hand over the company to its senior creditors.
Lenders blamed their woes on the impact of the Covid pandemic and post-pandemic market challenges and disruptions, including supply chain challenges, labor shortages, higher costs, inflation, higher raw material prices, and shrinking customers. It is also a charge of tariffs.
Auto giant First Brands Group filed for Chapter 11 bankruptcy on September 25, 2025 with nearly $6 billion in debt.
The first brands make auto parts products, such as Michelin Licensed Wiper Blades, Raybestos Complete Brake Solutions, Frame Filtration Products, Autolite Spark Plugs, and Enco Wiper Blades.
Trucks: unlimited and specified
Off-road buggies: Class 1 AWD, Class 1, and Class 10
Dun Bugis: A2, S2, and S4.
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This story was originally published by The Street on March 7, 2026, where it first appeared in the Auto section. Add TheStreet as a Favorite Source by clicking here.
