Automotive insolvencies in the automotive industry fell by 25% year-on-year from 43% to 32%, according to Experian’s latest October Insolvency and Late Payment indices.
This meant that the rate of automotive companies becoming insolvent stood at 0.09% or 32 businesses in October 2010, which was a significant drop from the same month last year (October 2009) when the rate was 0.12%. It was also an improvement on last month’s rate of 0.10%.
Late payment figures continue to increase to record levels for the industry at 17.81 days beyond terms. A minor increase since last month’s 17.55 days, but a fairly sharp rise from 15.39 days seen in October 2009.
However, this has not affected the financial strength score of the industry which has seen a year-on-year improvement from 79.94 in October 2009 to 80.12 in October this year.
Joe Myers, director of commercial for Experian Business Information, said: “Although the insolvency rate and financial strength score for the automotive industry have been seen some ups and downs each month, the general trend for both has been heading in the right direction.
“Payment performance, however, is becoming an increasingly key issue and although automotive businesses remain the fifth fastest paying industry, they are still paying far later than they were when it peaked at 17.10 days in 2009.
“Continuation of this trend will reduce cash flow within the industry which will have a direct impact on the insolvency rate in months to come.”