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The Rise and Fall Of Automotive Business In The Past Decade

  • Feb 3, 2014
  • Joannariver
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  • Business
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Most of the vehicles comprised in UK’s automotive industry are the premiums and sport cars models. Key player such as Toyota, Nissan and Honda have played an indispensable role of increasing the performance of the automotive sector in England through manufacturing models such as Jaguar, Land Rovers and Aston Martins, which are models distributed across the world. The main factor that contributed to the increase of sale in this sector is the manufacturing and distribution of diverse cars that met the needs of a wider customer base.

Rise and Fall of Automotive Business

In the year 2010, the Nottingham, UK business enterprises specializing with the world’s information and services reported that the number of business bankruptcy in the automotive sector in England to have declined by 25 percent. According to the October late payment indices and insolvency, the value was from 43 percent of the previous year to 32 percent. This implied that the rate of automotive business enterprise become bankrupt stood at 0.09 per cent by October 2010. This was drastic drop from a value of 0.12 per cent in the same month, the previous year. The report further showed that late payment continued to increase to record levels for the automotive sector at about 17.81 days which is beyond terms (Hale, 2014).

The Rise and Fall Of Automotive Business In The Past Decade

Nevertheless, although the liquidation increased, it did not affect the financial strength score stipulated in the sector. Rather, the industry has demonstrated a continuous annual improvement from 79.94 to 80.12. Joe Meyer, who is a director for the research firm, Experian Business Information, noted that the trends highlighted by the financial strength and liquidation rate of the automotive sector is only shows the ups and down of the industry, but it is generally heading in the right direction(Hale, 2014).

In his opinion, the key issue that affects the industry is its payment performance. According the research studies, although this sector is the fifth fastest paying sector, it is still paying a date that is later than where it was when it peaked i.e. 17.10 days. It is perceived these delays are the key reasons why the cash flow within the sector is dwindling over time. Simultaneously, this trend has direct impact on the rate of insolvency in the industry (Hale, 2014).

In 2013, statistics showed that the sale of European cars further declined but at a slower rate. Here, new car registration in the European Union fell by 1.7% in 2013. This value was less than the 8.2% that was recorded in 2012 (European, 2014). Although there are a number of reasons that has contributed to the decline of sale in the automotive business of UK, studies reveal that the decrease of consumers demanding for vehicles as a key reason. This phenomenon was highlighted by the persistent decline in the number of consumers that apply for provisional driving license online. The rise in costs of living and especially the continuous increase of fuel price is one the reason that has discouraged people from purchasing cars.

Reference

Hale, N. (2014). Automotive Business Failures Fall 24 Percent in October. Experian

European Cars Sales Fell At A Slower Rate in 2013. (2014). BBC News Business.Retrieved on 22nd January from http://www.bbc.co.uk/news/business-25755834

  • Feb 3, 2014
  • Joannariver
  • Business
  • 1527 Views