15 Jun 2024
The voice of the independent garage sector

Record insolvencies for automotive industry coming?

Company insolvencies in the automotive industry may reach their highest ever levels during 2023 it has been suggested.

There is already an upward trend. 273 automotive companies entered insolvency in February 2023. The total for the same month in 2022 was 176 , which was itself a big jump from the 93 seen in February 2021.

Commenting on the situation, Lauren Hartigan-Pritchard, Head of Restructuring and Insolvency at law firm Higgs LLP said: “Company insolvencies are at record levels across the board and unfortunately automotive is high on the list. We are witnessing a perfect storm of events that is making life very difficult for many businesses right across the country. Unless the economic picture improves, high levels of business failures are guaranteed.”

Overall, there were 2,457 company insolvencies in March, up 16% rise on March 2022. Compulsory liquidations – including partnership winding-up orders – stood at 288 in March, up 106% year-on-year. There were 5,747 Q1 company insolvencies, 18% up on Q1 2022.

At the same time, during the 2022/23 financial year, 932 directors were disqualified, 16% up on 2021/22. Of these, 459 included an allegation relating to abuse of the Government’s Covid-19 Bounce Back Loan Scheme.

Lauren said early action is essential: “There are often a whole host of restructuring options available if businesses seek advice at an early stage. f a business is in a precarious position, it doesn’t always have to end in insolvency.”