Motor retail administrations saw an increase of 20% in Q1 this year both quarter-on-quarter and year-on-year.

The latest statistics from Insolvency Direct, the regulators of the UK insolvency profession and part of the Department for Business Innovation and Skills (BIS), show that 31 automotive retailers went into administration in the first three months of 2012.

Graham Bushby, Head of Automotive at Baker Tilly Restructuring and Recovery, said: “Seasonally, the first quarter of any given year presents significant challenge for dealerships in terms of increasing sales, by encouraging customers to part with their hard-earned cash.

“The ripple effect of buoyant March car registrations may slightly ease dealer woes in Q2. However, what may also be at play is that some dealerships are chasing sales through heavy discounting at the expense of profit, the true life blood of good financial performance.”