Late payments have been identified as a grown problem among car industry companies but the numbers going bust has fallen.
According to the credit-rating agency Eperian, the insolvencies rate fell from 0.13 per cent in June 2009 to 0.09 per cent in June 2010, with the number of actual insolvencies at 31 from 44, according to the latest Insolvency & Late Payment indices from Experian®, the global information services company.
However, payment performance amongst automotive businesses, itself an indicator of business confidence took a significant dip in June. The number of days beyond terms that automotive businesses paid their bills increased to 17.01, a high not seen since December 2008.
The financial strength2 of the automotive industry also saw a slight fall year-on-year, declining to 79.74 from 79.79 in June 2009.
Joe Myers, Director of Commercial at Experian, said: “Although the insolvency rate is much better than this time last year, there’s no doubt poor payment performance in June had an adverse affect on the financial strength of the industry.
Dealers need to ensure they stay within their payment terms, this is vital to maintaining a good business credit score and a low risk profile, key factors that help dealers retain their business relationships and lines of credit.”
Source: pH, an Experian company
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