Fewer motor traders fold in 2007 but
outlook still cloudy

Business failure among motor traders posted a 22.3 per cent
decline in 2007 but the trend may be reaching a point of
inflection, according to the latest insolvency figures from
Experian, an
information services company.
 
The figures for the year showed that 248 motor traders failed
compared with 319 in 2006, the biggest annual drop in failures
since 2002 when Experian started collating this information. The
motor trade saw the highest increase in the number of failures in
2005 (up 17.4 per cent to 283), followed by the second highest
increase (12.7 per cent) in 2006 when the figure rose to 319.
 
However, the fall in the number of failures in 2007 eased towards
the end of the year when the number of failures fell by 1.4 per
cent in the fourth quarter compared with the same period in 2006.
In the first, second and third quarters, failures fell 37.5 per
cent, 30.3 per cent and 18.8 per cent respectively.
 
Kirk
Fletcher, managing director of Experian’s automotive division,
said: “The annual figures may indicate an optimistic end to the
year, but this is far from the case and the final quarter gives a
truer picture. The fact that the declining rate of business failure
dropped off markedly as the year progressed – to virtually nothing
by the final quarter of the year – suggests that 2008 could see the
failure rate rise again.”

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“And although motor traders recorded the ninth highest
improvement for the year among the 34 sectors analysed, they were
still amongst the highest (14th place) in terms of the number of
insolvencies in any sector,” he continued.
 
“Businesses are feeling the effects of interest rate rises and the
squeeze on borrowing conditions and these figures are masking the
real picture. Trading conditions are still tough and many smaller
dealers are struggling. The downturn in insolvencies in 2007 could
simply be highlighting the increasing trend of larger dealers
merging with the smaller dealers that are struggling to remain in
business.”
 
Business failures in all sectors in the fourth quarter fell by 20
per cent. For 2007 as a whole, the number of failures throughout
all sectors fell by 8.9 per cent to 18,263.
 

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