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Car dealer insolvencies set to rise but sector confounds UK-wide business predictions

Time 4 months ago

New research has highlighted growing concerns about car dealer insolvencies in the next 12 month.

More than two thirds of senior executives surveyed by the Finance & Leasing Association (69 per cent) said they believe the number of dealer insolvencies will grow but 54 per cent only believe this will increase slightly.

This was much better than UK businesses on a whole, with 92 per cent of respondents expecting some increase in the number UK business insolvencies over the next twelve months, while 49 per cent expecting a significant increase.


Although 31 per cent believe there will be no change, no respondents thought the number would decrease.

The latest research from the FLA, released today, demonstrates how uncertainty is dividing opinions from senior executives on their outlook of the industry in the next 12 months.

The Q1 2021 Industry Outlook Survey asked 79 senior executives across the asset finance, consumer finance and motor finance markets about their predictions for the future of financing.

There was more positivity with 70 per cent of respondents expecting some increase in new business over the period too, with 37 per cent expecting new business to increase by 10 per cent or more.

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The majority of respondents are expecting that the number of customer arrears will increase only slightly, at 68 per cent, while only nine per cent say they expect a significant increase in people unable to pay.

These markets have already given unprecedented support to their customers since the pandemic began, granting more than 1.5m requests for forbearance.

Geraldine Kilkelly, head of research and chief economist at the FLA, said: ‘The results of the Q1 2021 survey reflect the industry’s concerns about the adverse impact of prolonged uncertainty on businesses and households.

‘But the results also point to the underlying pre-crisis strength of FLA members which has helped them weather the pandemic so far.

‘The specialist knowledge of finance providers means the industry is in an ideal position to help drive forward Government initiatives such as levelling-up and net-zero.’

Rebecca Chaplin's avatar

Rebecca has been a motoring and business journalist since 2014, previously writing and presenting for titles such as the Press Association, Auto Express and Car Buyer. She has worked in many roles for Car Dealer Magazine’s publisher Blackball Media including head of editorial.

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