However, 53 motor traders still went bust during the second quarter of 2007.
Experian, the global information solutions company, said it was the highest fall in failures that the automotive industry has seen during any quarter since it started collating the information in 1998.
Business failures throughout all sectors in the UK fell by 4.9%, but motor traders saw the fifth highest drop in businesses failing.
Kirk Fletcher, managing director of Experian’s Automotive division, said: “The picture began to look more positive as the number of motor traders failing started falling each quarter after the second quarter of 2006.
“However, the general feeling amongst traders is that 2007 so far has been difficult. Business confidence among UK firms in July was recorded at its lowest level since February 2006.”