Close my Automotive Businesses

Rescue and Closure Options for Automotive Businesses

Automotive business insolvency happens when a garage, dealership, parts supplier, or vehicle manufacturer cannot pay its debts as they fall due. If this describes your company’s position, you have two options – to rescue or close your business. The right option for you depends on whether your automotive business is viable. As licensed Insolvency Practitioners with experience handling both automotive Company Voluntary Arrangements (CVAs) and liquidations, we guide you through both options and share our first-hand experience.

Why are automotive businesses under financial pressure right now?

The automotive sector consistently ranks as the second-highest sector for company insolvencies in England and Wales, behind construction, according to Insolvency Service data. In the 12 months between June 2025 and June 2026, 3,463 automotive companies entered insolvency. This includes automotive wholesalers, retail trade, and motor vehicle and motorcycle repair companies. The number of insolvencies is down from 3,661 at the start of 2026, however, the sector remains consistently exposed.

Automotive directors who call us consistently cite the same pressures:

• Poor credit control management – Poorly managed credit control exposes the business to considerable bad debt risk. Actively verify limits and review thresholds for persistent offenders based on insolvency risk.
• Stocking and floorplan finance costs – As vehicles on the forecourt are usually funded by floorplan or stocking finance, higher interest on these facilities is squeezing margins, particularly for businesses with high volumes of unsold units.
• Manufacturer franchise changes - Where a franchise agreement is terminated or restructured, a dealership can lose a large share of its revenue with little notice.
• Shift to electric vehicles (EVs) - EVs generally need less routine servicing than petrol or diesel vehicles, which is reducing sales and workshop revenue for franchised dealers and independent garages.

Most directors we speak with are usually facing a combination of these pressures, rather than one in isolation. In our experience, the trigger point for seeking professional insolvency advice is often a demand from a floorplan lender, a cash shortfall ahead of a peak season, or growing competition leading to reduced demand.

“Spoke with Chris who put me at ease straight away. He was very knowledgeable and listened intently to all my worries and concerns. Will definitely be using Real Business Rescue and advise anyone with business issues to give them a call.”

Diana

 

Contact the Real Business Rescue Team today

Chris Bristow
Business Debt Expert

What rescue options are available for automotive businesses?

If your automotive business is experiencing serious and persistent financial problems, restructuring, whether operational, financial, or both, can get it back on track.

In our experience, restructuring automotive companies often involves negotiating with lenders early before defaulting on asset, floorplan, or stocking finance payments. Selling excess stock, machinery, and tools, from car parts, raw materials, vehicles, and inventory stock can raise funds quickly. Downsizing business operations and recalibrating to focus on core income streams can make it more efficient and company operations more sustainable. Our automotive licensed Insolvency Practitioners will explore every option for saving your business or the parts that are viable.

The rescue options available to automotive businesses include:

Company Administration - a formal process giving the business breathing space from creditor action, while maintaining continuity, such as keeping showrooms open and MOT bays running, as it explores options including a sale.

Pre-pack Administration - where a sale of the business, or parts of it such as a workshop or parts operation, is arranged before the administrator is appointed. This is common in the motor trade where the premises, relationships, or customer base still hold value.

Company Voluntary Arrangement (CVA) - a legally-binding repayment plan, typically running three to five years, allowing the company to repay debts, such as those owed to HMRC, floorplan or stocking finance providers, parts suppliers, and landlords.

Time to Pay (TTP) arrangement - where the core debt is to HMRC, a TTP instalment plan can address this, freeing up cash to pay parts suppliers and staff, and contractor wages.

Refinancing or asset and invoice finance - where the business needs working capital, our in-house business finance team can help renegotiate or replace finance facilities.

In our experience, some creditors are considerably more flexible than others when it comes to supporting a CVA. Knowing which creditors are likely to back a CVA proposal and which will show resistance comes from having successfully negotiated CVAs across this sector.

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How do I close an automotive company?

If your automotive company is already insolvent and you want to close it, this is achieved through a Creditors’ Voluntary Liquidation (CVL). You will need to appoint a licensed Insolvency Practitioner to carry out the liquidation on your company’s behalf.

This will involve identifying any assets belonging to the automotive company, before arranging for these to be valued and sold. In practice, the process usually looks like this:

• Assets are identified - This may include vehicles, component parts, and workshop machinery.
• Vehicles and parts on finance are separated - Where these are subject to a stocking finance agreement or retention of title clause, they’ll usually need to be returned to the finance provider or supplier, rather than sold, as the company may not own them outright.
• Remaining assets are valued and sold - Proceeds are distributed among creditors, as set out in the Insolvency Act 1986.
• Any debt left over is written off on liquidation, unless secured with a personal guarantee.

If your automotive company is solvent, meaning it can pay its debts in full, and retained profits exceed £25,000, a Members’ Voluntary Liquidation (MVL) is usually the more tax-efficient route.

As the director of an insolvent company, you have a duty to protect the financial position of creditors. Seeking advice at the first sign of insolvency helps protect your creditors’ interests and demonstrates that you’re meeting your duties.

How we’ve helped automotive businesses

An automotive business, trading since 1997, became insolvent after failing to recover from the drop in consumer demand from the pandemic period. Company finances deteriorated quickly, compounded by poor credit control and slow customer payments.

We reviewed the company’s financial position and concluded that pre-pack administration was the route most likely to maximise the value of company assets. A sale of the business and its assets was agreed ahead of our formal appointment as administrators. We conducted the investigations necessary as part of pre-pack administration, and managed the post-completion process. This involved concluding asset realisations and successfully recovering outstanding payments, allowing preferential and secondary preferential creditors to be paid.

“This case is a good example of why timing matters in this sector. By the time the business came to us, income had already fallen and credit control hadn’t kept pace with slower-paying customers, which is something we see often in automotive businesses running on tight margins. Because we were able to move quickly into a pre-pack, we preserved the value of the business as a going concern rather than losing it to a slower, more drawn-out sale process.”

Shaun Barton CPI, Partner, Real Business Rescue

What director redundancy am I entitled to if I liquidate my automotive company?

As the limited company director of your automotive business, you may be entitled to redundancy pay following the liquidation of your company, plus any unpaid wages, holiday, or notice pay you’re owed. There are strict conditions you must meet to qualify for redundancy, read our complete guide on director redundancy pay.

How can Real Business Rescue support automotive businesses?

Our licensed Insolvency Practitioners have demonstrable sector expertise, having negotiated CVAs on behalf of auto-repair businesses, structured orderly exits for garage and bodyshop owners approaching retirement, and secured competitive refinance facilities for car parts retailers. For expert and confidential advice, contact one of our licensed Insolvency Practitioners specialising in automotive insolvencies.