The automotive auto parts aftermarket remained stable in the first half of 2025, as retail sales increased about 1% in both revenue and demand, according to market research firm Circana, Aftermarket Matters reported.
But increased revenue and demand in the industry didn't prevent several auto parts chains from filing for bankruptcy.
After filing for Chapter 11 bankruptcy protection in November 2024, electric vehicle battery maker Northvolt AB dismissed its U.S. case and filed for bankruptcy liquidation in Sweden in March 2025.
Related: Popular Italian restaurant chain files Chapter 11 bankruptcy
Also, motor vehicle parts manufacturer Hypertech Inc. and two affiliates filed for Chapter 11 bankruptcy protection on April 11, 2025, to reorganize their businesses.
The Memphis, Tenn.-based company manufactures automotive performance electronics and components.
Giant auto parts company files bankruptcy
In the biggest auto parts bankruptcy so far this year, global giant Marelli Holdings Co. filed for Chapter 11 bankruptcy on June 11, listing $4.9 billion in funded debt, with plans to hand the company over to its senior lenders.
The debtor blamed its distress on the effects of the Covid pandemic and post-pandemic market challenges and headwinds, including supply chain challenges, labor shortages, high costs, inflation, rising prices of raw materials, and declining customer volumes.
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Car Toys files bankruptcy to sell its assets
And now, longstanding car audio retail chain Car Toys Inc. as filed for Chapter 11 bankruptcy protection, seeking to sell its assets to five different buyers in four states.
Car Toys filed its petition in the U.S. Bankruptcy Court for the Western District of Washington on Aug. 18, listing $10 million to $50 million in assets and liabilities in its petition.
Auto parts companies filing bankruptcy in 2025:
- Northvolt AB, liquidation, March 2025.
- Hypertech, April 2025.
- Marelli Holdings, June 2025.
- Car Toys, August 2025.
The debtor had about $30 million in liabilities, according to court papers.
The debtor's largest unsecured creditors include Pembroke Real Estate, owed $4.2 million in lawsuit debt; Kenwood Electronics, owed over $1.27 million; and Alpine Electronics, owed over $612,000.
Related: 63-year-old retailer closing all stores in Chapter 11 bankruptcy
The debtor has faced financial difficulties for several years, as its car audio business, which represents 70% of the company's sales, has declined about 8% to 10% annually since 2020, according to a declaration by the debtor's Chief Restructuring Officer Philip Kaestle of Sierra Constellation Partners.
“In 2021, the company experienced a strong financial year following pent-up demand coming out of the Covid-19 pandemic,” Kaestle said in the declaration.
“However, this success was short-lived,” Kaestle said.
Wireless Advocates closes after losing Costco partnership
The walls came crashing down in 2022 when Car Toys' affiliate Wireless Advocates LLC, which sold wireless phones and network service contracts, lost an exclusive partnership with Costco Wholesale Company.
The dissolved partnership was a fatal blow to Wireless Advocates, as the company shut down its business in December 2022, and the shared management and overhead expenses between the two affiliates shifted to Car Toys.
Wireless Advocates is currently a Chapter 7 bankruptcy liquidation debtor.
Car Toys' revenue plummets
Car Toys' revenue plummeted by 3.3% from $127 million in 2021 to $123 million in 2022, and by another 8.3% in 2023 to $113 million, the declaration said.
As the company's revenues continued to decline in 2024, it hired restructuring advisers and laid off 140 employees.
More bankruptcy:
- Unusual bar and restaurant chain files Chapter 7 bankruptcy
- Major healthcare company files Chapter 11 bankruptcy, seeks sale
- Home improvement retail supplier files for Chapter 11 bankruptcy
Revenue did not improve in 2025 as by July 2025, sales were down 14% year-over-year.
The Seattle-based debtor is the nation's largest independent specialty car audio and mobile electronics retail chain, according to court papers, with 46 locations in four states.
Car Toys Inc.'s 46 retail locations:
- Texas (16)
- Washington (14)
- Colorado (10)
- Oregon (6)
Car Toys began marketing itself for sale in March 2025 and reached purchase and sale agreements with five competitors to purchase 35 of its locations in 4 states for a combined $13.75 million in a Section 363 bankruptcy sale.
Aspen Sound is seeking to purchase two Spokane, Wash., locations for $477,536, and Drive In Sound looks to purchase a Colorado Springs North location in Colorado for $533,809.
Sound Distribution seeks to purchase six Colorado and nine Washington locations for $1.138 million, and partners Don Longworth and Raul Shakarov offered to buy five Oregon locations for $1.522 million.
CTX Operating Co. wants to acquire 12 locations in Texas for $3.951 million.
Car Toys proposed store buyers:
- Aspen Sound, Spokane, Wash. (2), $477,536.
- Drive In Sound Colorado Springs North, Colo. (1), $533,809.
- Sound Distribution Colorado (6), Washington (9), $1.138 million.
- Don Longworth, Raul Shakarov, Oregon (5), $1.522 million.
- CTX Operating Co., Texas (12), $3.951 million.
Car Toys, which was founded by Daniel Brettler in 1982, specializes in sales of car audio, video, car alarms, remote start, car accessories, marine audio and powersports, and window tinting services.
