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Positive start to the year for dealers

Business failures amongst motor traders dropped by 27.5% during the first quarter of 2007 compared to the same period last year.

Sixty-six motor traders went bust during January, February and March in 2007 compared to 91 during the same period in 2006, according to the latest insolvency figures from Experian, the global information solutions company.

This was the biggest decline in business failures the industry seen during any quarter since 2003, when Experian first started analysing business failures data specifically by sector.

The motor trade was among the five sectors to see the biggest declines in the number of companies going bust. Overall business failures in all sectors throughout the UK dropped by 8.8% compared to the same period in 2006 – the biggest fall in four years.

Kirk Fletcher, sales director/acting managing director of Experian’s Automotive division, said: “The drop in companies going bust signifies the most positive start to the year that the industry had seen in a while and indicates that motor traders have been taking appropriate steps to deal with the threats they have been facing.

“Although 2006 overall saw automotive business failures peak, the industry was already beginning to see improvement towards the end of the year, as the number of automotive business failures began to slow down. The trend appears to have continued into 2007, with the biggest decline in businesses going bust so far.

“This has been helped by the sales of new cars during the first quarter. March saw the second highest registrations ever since the bi-annual plate change was introduced, while there has been strong demand within the used car market during the quarter as a whole. As a result, dealers saw values remain fairly robust during this period.

“However, margins are still under pressure and effective ways to operate, market and sell vehicles have had a major part to play in helping dealers stay afloat. Consumer spending has picked up, but it has been more cautious, especially when it has come to buying a big ticket item, such as a car. Interest rates are expected to rise again in May, so sales may be affected and dealers may find themselves facing the same dilemma they faced this time last year unless they ensure they have measures in place to deal with them.”

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