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Insolvencies slow down and suggest recession is easing
publication date: Sep 23, 2009
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author/source: Robin Roberts
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. | |
RAC Warranty says that used car shortages mean car dealers should be targeting yields to grow their profits.
Serious stock shortages mean pure volume will not be able to grow revenues.
The trick here, says the firm’s Ian Simpson, will be to increase upsale of products such as warranties and GAP insurance.
"Dealers will almost inevitably sell fewer cars in the medium term until stock levels start to recover," he warned.
The true extent of this will only become clear in the coming months.
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“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 also need become more aware of.” |
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