After two years which saw rising numbers of business failure among motor traders, 2007 saw business failures drop by 22.3pc, according to the latest, full year 2007 insolvency figures from Experian.

In 2007 248 motor traders failed, compared to 319 in 2006. This is the biggest annual drop in failures that the industry has seen since Experian started collating this information in 2002.

This was after dealers saw the highest increase in the number of motor traders failing during 2005, up 17.4pc to 283, followed by the second highest increase (12.7pc) during 2006.

As the final quarter of 2007 came to a close, the number of business failures among motor traders fell by 1.4pc compared to the same period in 2006 – a much smaller fall in failures than seen in quarter one (down 37.5pc), two (down 30.3pc) and three (down 18.8pc) in 2007.

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 more 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.

"Although motor traders recorded the ninth highest improvement for the year of the 34 sectors analysed, they were still amongst the highest (14th place) in terms of the number of insolvencies in any sector.”

Business failures in all sectors during quarter four fell by 20pc. For 2007 as a whole, the number of failures throughout all sectors fell by 8.9pc to 18,263.