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Automotive business failures rise for third consecutive month of 2010

Automotive business failure rates have risen for the third month in a row with smaller independent automotive businesses that are struggling the most.


According to Experian’s March 2010 Insolvency & Late Payment index the rate of automotive companies becoming insolvent stood at 0.14% in March 2010, which was a significant increase from the previous month (February 2010) when the rate was 0.09%.

However, the rate remained static compared to March 2009.

Bill payment performance figures saw a minor increase from 14.54 days in February 2010 up to 15.03 days for March.

Compared to March 2009, the picture is more positive; a whole two days were shaved off, leaving the motor industry as the fifth fastest industry when it comes to paying late bills.

The financial strength score of the industry has also remained fairly stable at 79.87, with only a slight deterioration from February 2010 (79.95).

However, it saw a year-on-year improvement from 79.13 in March 2009. It continues to remain relatively close to the UK’s average financial strength score of 80.99.

Mark Nuttall, Experian business information and automotive general manager, UK & Ireland, said: "The insolvency rate and late payment for the automotive industry have seen some sporadic monthly highs and lows, but the general trend for both had been heading in the right direction.

"The feedback we are getting is that it is the smaller independent automotive businesses that are struggling the most. Key issues include late payment and the consumer’s desire to go with long-standing larger nationwide companies.

"It is at times like this that tools, including provenance checks and business monitoring, help dealers to exercise caution, manage their risk exposure and, as a consequence, operate more efficiently."

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