More dealers seeking credit

Dealerships and other automotive retailers are 1.2 times more likely to be placed into liquidation than typical New Zealand businesses, according to new figures from credit bureau Centrix.

The bureau’s June credit indicator report shows there are 43,290 registered companies in retail trades, with 3,522 of those selling motor vehicles or parts.

Those automotive businesses have a liquidation rating of 1.2X, the fifth highest among the 11 classifications that make up the retail sector. Centrix notes the average rating for the retail trade is 1X.

Over the past year, 159 companies in the retail sector were placed into liquidation, up seven per cent from 149 in the previous year. 

Analysis by Centrix shows credit demand for businesses selling motor vehicles and parts has increased 14 per cent year-on-year, below the retail sector’s average of 19 per cent. 

Credit defaults for motor-vehicle businesses were up by 30 per cent over the same period, compared with an average of 4 per cent for all retailers, the report reveals.

Keith McLaughlin, managing director of Centrix, says the overall number of company liquidations is up 30 per cent year-on-year, although the rate of growth is starting to ease. 

“Small to medium enterprises across the country are most acutely affected by these liquidations, particularly in the construction, property and hospitality sectors,” he adds. 

“However, the number of company credit defaults has been reducing for three consecutive months, which is a positive sign. 

“Whilst compared to last year they are still higher, the three-month trend could indicate that less businesses are missing payments and falling into a debt collection process.”

Growth for car loans

McLaughlin, pictured, notes demand for consumer and business credit rose in May, up 4.9 per cent and eight per cent respectively year-on-year. 

“New non-mortgage lending, including credit cards, vehicle and personal loans, buy now, pay later, and overdrafts, is up 4.5 per cent year-on-year, primarily driven by increased activity in personal loans and vehicle finance in recent months,” the Centrix report adds.  

A breakdown of the figures shows demand for automotive loans rose 0.6 per cent, credit cards were up 21.8 per cent and applications for personal loans grew 6.1 per cent from a year ago.

Meanwhile, the proportion of consumers in arrears in April fell to 12.4 per cent of the credit active population – equating to 483,000 people – down from 12.6 per cent in the prior month.
However, the number of consumers who are 90-plus days past due has risen to 83,000, the highest level since July last year.