Red flag for UK automotive as claims spike

Surge of late payments in the automotive industry indicates mounting financial stress for the UK’s automotive sector with claims against UK OEMs, component manufacturers, and dealerships rising by 78% year-on-year, according to new data from Atradius one of the UK’s large trade credit insurers.

Claims have also increased 64% across the wider transport sector covering rental firms, fleet operators, and logistics providers, and indicates an early sign of cash-flow stress ahead of the busy spring vehicle sales season, amid intensifying competition from new EV brands entering from China.

“What we’re seeing is the financial strain of a sector being reshaped in real time.  Late payment claims are rising sharply across automotive and transport, reflecting mounting pressure on margins, asset values and liquidity,” says Nicola Harris, Senior Risk Underwriter, Atradius.  “As new Chinese EV brands prepare to enter the UK at scale, competition is accelerating faster than many balance sheets can absorb. For suppliers, dealers and fleet operators alike, unpaid invoices are an early warning that cash-flow resilience is being tested – making it critical that businesses have the right protection in place to safeguard revenue as the market continues to shift.”

In 2025 Chinese automakers doubled their UK market share to 10%, with 18% of new car registrations in December alone.  With several Chinese EV brands such as Nio, Aion and Zeekr set to launch in the UK in 2026 competition will continue to intensify competition and place downward pressure on dealership margins, fleet resale values, and component supply chains, translating in cash flow issues on the ground.  

Notable closures in 2025 include luxury supercar dealer Targa Florio Cars, a family run Volkswagen dealer in Doncaster, and several sites from major groups such as Vertu Motors.  At the same time, rental and fleet operators – including companies like Zipcar, which has recently announced it will cease UK operations – are increasingly exposed to residual value volatility and financing pressures, risks that could amplify broader sector challenges.