Douglas Stafford, the 30-year-old mystery shopping company that has counted Ford, Honda, Suzuki and Volkswagen among its clients, will cease trading in January with the loss of 50 jobs.
In an email seen by AM, Douglas Stafford's managing director Nigel Cook has cited strong competition "continuously undercutting us on price" as having lowered the value of the mystery shopping market, to the extent that "we are charging our clients 30% less than we did 10 years ago" and "the business model does not work for us".
He said clients have requested price reductions and "other companies seem to be able to do it for less, but not us, it is not sustainable, sensible or viable" as costs have increased and margins diminished.
Cook said he is also concerned about the GDPR implications of mystery shoppers using addresses local to where they are conducting a visit, and the costs of validating these addresses, and that the householders have given permission to use them.
"Trust and ethical business practises are important to me in business," he said.
Portsmouth-based Douglas Stafford has called in specialist consultants to advise on closing the business in an orderly fashion, he said, to ensure employees receive their correct redundancy packages and suppliers are paid.
Some sub-contracted mystery shoppers are concerned whether they will get their last month's payment, however.
It comes less than a year after the business moved to new premises and rebranded as a customer experience consultancy.
Cook said: "After 30 years of providing mystery shopping services unfortunately, and sadly, I have decided to retire and the business will close."
Recent clients included BMW, Honda, Suzuki, Sytner Group and Vertu Motors, and in the past it worked with the likes of Ford, Renault and Volkswagen.
Rival firm Performance In People published a blog last week mentioning Douglas Stafford's closure and the administration of Automotive Insights earlier in 2019.
Cook said its doing so saddened him given the unfortunate situation where a large number of people are being made redundant at this time of year.