sector still under pressure
In Q3 2007 business failures among dealers fell by 18.8 per cent
compared with the same period in 2006 – but this does not
necessarily mean that the sector is in good health, data company
Experian
has warned.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
The third quarter of this year saw 56 motor trade failures
compared with 69 last year. Overall, 2007 has seen dealer failures
fall by 27.7 per cent.
However, Kirk
Fletcher, managing director of Experian’s automotive division
noted that the numbers do not tell the whole story. He said:
“Although business failures among dealers have dropped, the reality
is that dealers are still finding the market conditions tough.
“What needs to be taken into account is the size of the motor
traders that this quarter’s figures actually include. Take for
example the recent demise of Dixon Motors, which was one of the
biggest dealer groups in the UK. It is one of the biggest
casualties the industry has seen for a while and is a barometer of
where the industry currently is. With dealers this size going bust,
the downturn in business failures does not necessarily paint a rosy
picture for the industry.”
He noted that continuing merger and acquisition activity among
motor dealers might also be concealing the extent of the sector’s
woes: “Furthermore, it is possible that many of the smaller dealers
seeking to leave these difficult trading conditions have instead
merged with bigger dealers, which may also be contributing to the
downturn in the insolvency numbers.”
Fletcher pointed to falling consumer confidence, an oversupply
of young cars leading to a squeeze on price margins and high
interest rates as areas of concern for motor dealers – which may
yet cause more failures before the year is out.
