The rate of business insolvencies for the automotive industry fell from 0.14% in July 2009 to 0.10% in July 2010, according to the latest insolvency and late payment indices from Experian.
The financial strength of the automotive industry also saw a slight improvement year-on-year, going up to 79.90 from 79.75 in July 2009. The financial strength score predicts the likelihood of a business failing in the next 12 months, with 100 being the least likely to default and 1 being the most likely.
Payment performance amongst automotive businesses saw a slight improvement from 16.98 in July last year, dropping to 16.84 in July this year, but the improvement was not as significant as it has been in previous months resulting in automotive business shifting from being the third fastest payers to the tenth in the last twelve months.
Joe Myers, commercial director for Experian Credit Services, said: “The decline in insolvencies and improvement in payment performance in July has meant that the financial strength score of the industry has remained buoyant this month.
“It seems the other sectors are catching up with automotive dealers in understanding that paying bills late can be detrimental to their business credit scores, business relationships, lines of credit and subsequently the business as a whole.”