Despite several interest rate rises and receding consumer spending, the sector has outperformed the same period in 2006. According to the Experian study, 53 dealers went bust during the April to June period this year compared to 76 in the second quarter of 2006.

- 53 dealers went bust - Industry fall of over 30% - Overall UK decline of 4.9% Source: Experian

Business failures throughout all sectors in the UK fell by 4.9 per cent, but motor traders saw the fifth highest drop in businesses failing. “This is a complete turnaround after the automotive industry saw the biggest year-on-year increase in business failures ever experienced during quarter one in 2006,” said Kirk Fletcher, managing director of Experian's Automotive division. “The picture began to look more positive as the number of motor traders failing started falling each quarter after the second quarter of 2006. However, the general feeling amongst traders is that 2007 so far has been difficult."

Fletcher said that consumers were still visiting showrooms but sales were getting harder to secure as higher interest rates hit spending. “People with mortgages and other debts are likely to struggle and this will have an impact on the car market,” Fletcher added.