News release
Ms Serj Heera
0115 992 2773/07837 652169
Automotive business failure rate hits annual high
However payment performance at best level since June 06
Nottingham, 22 November 2009 — The automotive industry bucked the national trend by seeing the rate of insolvencies[1] rise in November, according to the latest Insolvency Index from Experian®, the global information services company.
Over 50 automotive businesses went under in November, a 13.3 per cent rise on November 2008, bringing the insolvency rate for automotive businesses to 0.15 per cent - it’s highest point since December 2008.
In contrast, Experian’s Late Payment data showed that automotive businesses paid their bills quicker than at any time since June 2006
On average, automotive businesses paid 15.01 days beyond agreed terms in November 2009, down 11.5 per cent from 16.96 in November 2008. Compared with other sectors, the automotive industry has been the fourth fastest to settle late bills, behind the agriculture/forestry/fishing, oil and servicing/repair sectors for the past four months.
This improvement in late payments has had a positive impact on the health of the automotive industry, as measured by Experian’s financial strength score[2], taking it from 78.91 in November 2008 to 80.07 in November 2009 - the highest since July 2008.
Mark Nuttall, General Manager of Experian’s Automotive business, said: “The automotive insolvency rate has seen a really unstable year further emphasising what a volatile market dealers are having to do business in.
“However, although insolvencies are up in the automotive industry, the outlook for the automotive businesses that have survived is more encouraging. The improvement in payment performance has had a really positive effect on the industry’s financial strength score. It will be interesting to see if dealers can take advantage of the last month of the 15 per cent VAT rate to survive the notoriously difficult month of December.”
|
Insolvency rate |
Nov-09 |
Nov-08 |
Oct-09 |
|
Automotive |
0.15% |
0.13% |
0.12% |
|
All sectors |
0.09% |
0.11% |
0.10% |
Source: pH, an Experian company
|
Insolvencies |
Nov-09 |
Nov-08 |
% Change from 08 |
Oct-09 |
|
Automotive |
51 |
45 |
13.3 |
43 |
|
All sectors |
1,634 |
2,061 |
-20.7 |
1,976 |
Source: pH, an Experian company
|
Financial Strength Score |
Nov-09 |
Nov-08 |
% Change from 08 |
Oct-09 |
|
Automotive |
80.07 |
78.91 |
1.5 |
79.94 |
|
All sectors |
81.26 |
79.66 |
2.0 |
81.14 |
Source: pH, an Experian company
|
Days Beyond Term |
Nov-09 |
Nov-08 |
% Change from 08 |
Oct-09 |
|
Automotive |
15.01 |
16.96 |
-11.5 |
15.46 |
|
All sectors |
20.62 |
23.52 |
-12.3 |
20.99 |
Source: pH, an Experian company
[1] The insolvency rate is calculated by comparing the number of automotive businesses that failed with the total automotive business population in Great Britain.
[2] 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.