The number of dealers who went out of business last month fell compared to the same period last year.

According to the latest figures from Experian, the rate of business failures in the automotive industry fell from 0.13% in June 2009 to 0.09% in June 2010, leaving the number of actual insolvencies at 31 from 44.

However, payment performance amongst automotive businesses - itself an indicator of business confidence - took a nosedive in June.

The number of days beyond terms that automotive businesses paid their bills increased to 17.01, a high not seen since December 2008.

The financial strength of the automotive industry also saw a slight fall year-on-year, declining to 79.74 from 79.79 in June 2009.

“Although the insolvency rate is much better than this time last year, there’s no doubt poor payment performance in June had an adverse affect on the financial strength of the industry," said Joe Myers, director of commercial at Experian.

"Dealers need to ensure they stay within their payment terms, this is vital to maintaining a good business credit score and a low risk profile, key factors that help dealers retain their business relationships and lines of credit.”