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Motor business insolvencies increase against trend

The automotive industry bucked the national trend by seeing the rate of insolvencies rise in November, according to the latest insolvency index from Experian.

Over 50 automotive businesses went under in November, a 13.3% rise on November 2008, bringing the insolvency rate for automotive businesses to 0.15% - its highest point since December 2008.

In contrast, Experian’s late payment data showed automotive businesses paid their bills quicker than at any time since June 2006.

On average, automotive businesses paid 15.01 days beyond agreed terms in November 2009, down 11.5% from 16.96 in November 2008.

Compared with other sectors, the automotive industry has been the fourth fastest to settle late bills, behind the agriculture/forestry/fishing, oil and servicing/repair sectors for the past four months.

This improvement in late payments has had a positive impact on the health of the automotive industry, as measured by Experian’s financial strength score, taking it from 78.91 in November 2008 to 80.07 in November 2009 - the highest since July 2008.

Mark Nuttall, general manager of Experian’s Automotive business, said: “The automotive insolvency rate has seen a really unstable year further emphasising what a volatile market dealers are having to do business in.

“However, although insolvencies are up in the automotive industry, the outlook for the automotive businesses that have survived is more encouraging. The improvement in payment performance has had a really positive effect on the industry’s financial strength score.”
 

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