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Dealer closures fall in 2007

The number of automotive businesses going bust last year dropped by 22.3% according to the latest insolvency figures from Experian.

The figures for the year showed that 248 motor traders failed compared to 319 in 2006.

This is the biggest annual drop in failures that the industry has seen since Experian started collating this information in 2002.

This was after dealers saw the highest increase in the number of motor traders failing during 2005, up 17.4% to 283, followed by the second highest increase (12.7%) during 2006 when the figure rose to 319.

As the final quarter of 2007 came to a close, the number of business failures among motor traders fell by 1.4%, compared to the same period in 2006 – a much smaller fall in failures than seen in quarter one (down 37.5%), two (down 30.3%) and three (down 18.8%) in 2007.

Kirk Fletcher, managing director of Experian’s Automotive division, said: “The annual figures may indicate an optimistic end to the year, but this is far from the case and the final quarter gives a more truer picture.

“The fact that the declining rate of business failure dropped off markedly as the year progressed – to virtually nothing by the final quarter of the year – suggests that 2008 could see the failure rate rise again. And, although motor traders recorded the ninth highest improvement for the year of the 34 sectors analysed, they were still amongst the highest (14th place) in terms of the number of insolvencies in any sector.”

Fletcher said many smaller dealers are still struggling and the decrease in insolvencies could be linked to the amount of larger dealer groups buying out the smaller struggling ones. Business failures in all sectors during quarter four fell by 20%. For 2007 as a whole, the number of failures throughout all sectors fell by 8.9% to 18,263.

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