Automotive business failures fall 24 per cent in October
Financial strength also improves despite poor payment performance
Nottingham, UK, 7th December 2010 — Experian®, the global information services company, today announced the number of business insolvencies[1] in the automotive industry in the UK fell by 25 per cent year-on-year from 43 per cent to 32 per cent, according to its October Insolvency and Late Payment indices.
This meant that the rate of automotive companies becoming insolvent stood at 0.09 per cent in October 2010, which was a significant drop from the same month last year (October 2009) when the rate was 0.12 per cent. It was also an improvement on last month’s rate of 0.10 per cent.
Late payment figures continue to increase to record levels for the industry at 17.81 days beyond terms. A minor increase since last month’s 17.55 days, but a fairly sharp rise from 15.39 days seen in October 2009.
However, this has not affected the financial strength score of the industry which has seen a year-on-year improvement from 79.94 in October 2009 to 80.12 in October this year.
Joe Myers, Director of Commercial for Experian Business Information, commented: “Although the insolvency rate and financial strength score for the automotive industry have been seen some ups and downs each month, the general trend for both has been heading in the right direction.
“Payment performance, however, is becoming an increasingly key issue and although automotive businesses remain the fifth fastest paying industry, they are still paying far later than they were when it peaked at 17.10 days in 2009. Continuation of this trend will reduce cash flow within the industry which will have a direct impact on the insolvency rate in months to come. A number of tools exist which can help you manage risks on your ledger and have a positive effect on your cash flow, helping to protect your business from insolvency.”
Insolvency rate |
Oct-10 |
Oct-09 |
Sept-10 |
Automotive |
0.09% |
0.12% |
0.10% |
All sectors |
0.08% |
0.10% |
0.08% |
Source: pH, an Experian company
Insolvencies |
Oct-10 |
Oct-09 |
% Change from 09 |
Sept-10 |
Automotive |
32 |
43 |
-25.6 |
37 |
All sectors |
1,635 |
1,976 |
-17.3 |
1,564 |
Source: pH, an Experian company
Financial Strength Score |
Oct-10 |
Oct-09 |
% Change from 09 |
Sept-10 |
Automotive |
80.12 |
79.94 |
0.2 |
80.09 |
All sectors |
81.00 |
81.14 |
-0.2 |
81.05 |
Source: pH, an Experian company
Days Beyond Term |
Oct-10 |
Oct-09 |
% Change from 09 |
Sept-10 |
Automotive |
17.81 |
15.39 |
15.7 |
17.55 |
All sectors |
24.12 |
21.00 |
14.8 |
23.70 |
Source: pH, an Experian company
Natalie Hale
0115 992 2645/07971 709274
About Experian
Experian is the leading global information services company, providing data and analytical tools to clients in more than 90 countries. The company helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score, and protect against identity theft.
Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended 31 March 2010 was $3.9 billion. Experian employs approximately 15,000 people in 40 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; Costa Mesa, California; and São Paulo, Brazil.
For more information, visit
http://www.experianplc.com
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[1] The insolvency rate is calculated by comparing the number of 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.