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Car parts sector must control costs - report

Record numbers of companies in the UK's automotive parts and accessories industry are losing money and sales as the battle for aftermarket share heats up, according to a new report.

The latest Plimsoll analysis of 1000 businesses warns that up to a third of the sector will suffer casualties. Its authors say 284 companies need to retreat to survive, while 368 should hold their position and just 166 are equipped to force home their current advantage.

Plimsoll says it reached its conclusions after looking at plans drawn up by each company.

“It seems the motor parts and accessories industry is waging a war,” says David Pattison, senior analyst at Plimsoll.

Continuing the military analogy, he adds: “Every general of an army must preserve the life of the troops by recognising the signs of strategic advantage and exploiting their enemies' weaknesses.

“If companies are vulnerable then they must retreat and regroup so they can fight another day.”

Pattison says the walking wounded are the 284 companies Plimsoll feels should retreat and regroup. The analysis suggests many of the at-risk businesses could survive, and even prosper, if costs were better controlled, turning an average loss of 5.8 per cent on sales to an average 0.9 per cent profit margin.

Each of the 1000 firms featured in the survey is named, with tactics, in Motor Parts and Accessories - Battle Plans, which costs £325 a copy.

Of the 166 performing above the industry norm 65 managed to grow last year on average by three per cent; 48 made a 65 per cent pre-tax margin on sales; 38 made a 25 per cent return on investment; and 20 increased their workforce by 10 per cent or more last year.

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