Credit crunch hits automotive companies

The British automotive industry has experienced its highest number of insolvencies since 2001, financial information provider Experian has said.

Some 134 insolvencies have been recorded so far this year in the industry, including 72 in the second quarter.

The figure is a 10.7 per cent increase on the first half of last year, Experian said.

Overall, the automotive trade suffered the tenth highest increase in insolvencies out of 34 industries analysed.

Managing director of Experian’s automotive division Kirk Fletcher said 2008 began positively but the new statistics “reveal a worrying nosedive”.

“Most companies are now monitoring the profiles of the businesses they are dealing with and dealers may find that they are under more scrutiny than before,” he said.

Mr Fletcher recommended concerned business owners should maintain a good credit score and low-risk profile.

Earlier this month Experian said the recent increase in sales of diesel cars was expected to slow as prices went up.