Automotive business failures at lowest rate since January 2008, according to Experian

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Automotive business failures at lowest rate since January 2008, according to experian

Nottingham, UK, 22 September 2009 - Figures from Experian’s Insolvency and Distress Index, revealed that the total number of insolvencies in the automotive industry fell by 18 per cent during August, compared to the same month in 2008.  This, coupled, with the strong underlying growth of the automotive business population has enabled the rate of insolvency to fall.

The percentage of total automotive businesses in the UK that went bust during August this year fell to 0.09 per cent, the lowest point in 20 months.

This is the first time since the beginning of 2008 that the rate of insolvency for the automotive industry has matched the rate of insolvency for the rest of the country.  Previously, it had remained higher and more erratic than the national rate of insolvency.

Experian’s data also indicates a slight year-on-year improvement in the financial solidity of businesses in the automotive industry, as measured by its average distress score.  The score predicts the likelihood of a business failing in the near future, with 100 being the least likely to default and 1 being the most likely. 

Mark Nuttall, General Manager of Experian’s Automotive business, said: “During the first six months of this year, the average distress score for the industry had been improving and has been fairly stable since June.     

“This latest data suggests that automotive businesses are proving to be far more resilient than businesses in some other sectors.  While the scrappage scheme has had a positive effect on the industry as a whole, these figures show that the financial distress levels among automotive businesses had started improving much earlier in the year.

“Many UK businesses are monitoring the health of suppliers, customers and partners, as well as themselves, in order to ensure they do not suffer from the impact of another business becoming insolvent.  This is something that automotive businesses are also becoming more aware of.”

For further advice on how to avoid becoming an insolvency statistic, dealers can visit www.experianautomotive.co.uk

Source: pH, an Experian company

Source: pH, an Experian company

Source: pH, an Experian company