Car Purchasing Process - UK - April 2017

Car Purchasing Process - UK - April 2017

Apr 2017 Mintel RetailN/A Price :
$ 2479

Car sales reached an all-time high in 2016. While this is good news for those involved in this sector, and a reflection of the efforts to stimulate new car sales in recent years, there are many reasons to be concerned about the next few years. Numerous factors appear set to impact on demand resulting in evermore creative approaches being required in order to continue to encourage purchasing.

Table of Content

OVERVIEW
What you need to know
Products covered in this Report

EXECUTIVE SUMMARY
The market
Car purchases surpass 10.5 million units in 2016
Figure 1: UK new and used car sales, by volume, 2011-21
Used car sales dominate the market
Figure 2: New and used car market volumes, 2011-16
Recent popularity of diesel appears to have peaked
Figure 3: Sales of cars, by fuel type, 2011-16
Dealers are growing their share of the overall market…
Figure 4: Change in share of new and used car volumes, by channel, 2013-16
Companies and brands
Mixed fortunes for car manufacturers
Manufacturers and distributors invest in online as a sales channel
Advertising expenditure expands
The consumer
Car owners are in the majority
Nearly half of all cars were purchased in the last two years
More than half of adults plan to buy a car in the next three years
Figure 5: Intention to purchase a car in the next 3 years, February 2017
Less than half of those planning to purchase expect to do so in the coming 12 months
Figure 6: Strongest intentions to purchase a car in the next 3 years, February 2017
New cars are preferred over used
Figure 7: Likelihood of new or used purchase, February 2017
Savings and part exchange are the most popular methods of paying for a car
Figure 8: Methods of payment for next car, February 2017
A minority of buyers are interested in buying online
Figure 9: Likelihood of buying next car online, February 2017
Independent and dealer websites dominate for online purchasing
Figure 10: Preferred internet, February 2017
Petrol leads as the preferred fuel for future car purchasers
Figure 11: Preference for future fuel types, February 2017
Diesel emission testing scandal records high awareness
What we think

ISSUES AND INSIGHTS
Have car sales reached a peak?
The facts
The implications
Diesel sales appear to be in reverse
The facts
The implications
Recent investment in online sales may finally signal growth for this channel
The facts
The implications

THE MARKET – WHAT YOU NEED TO KNOW
Car sales surpass 10 million in 2016
Financial factors are a major factor behind stronger sales
Used car sales dominate the market
The dominance of diesel would appear to be at an end
Dealers dominate new and used car sales
Rising costs and competition from other forms of transport remain a threat

MARKET SIZE AND FORECAST
Car purchases breach 10 million units per year for the first time in 2016
Figure 12: UK new and used car sales, by volume, 2011-21
Figure 13: Best- and worst-case forecasts for UK new and used sales, 2011-21
Forecast methodology
The impact of the EU referendum vote
UK car market is performing better than could have been expected
Figure 14: Alternative market scenarios for the post-Brexit car market, at current prices, 2016-21
Figure 15: Detailed post-Brexit scenarios for UK new and used car sales, at current prices, 2016-21
Wider demand for vehicles is set to soften after a period of expansion

MARKET SEGMENTATION
Used cars continue to remain popular with purchasers
Figure 16: New and used car market volumes, 2011-16
South East accounts for a fifth of new car registrations
Figure 17: New car registrations by region, 2011-15
Private sales of new cars show signs of stagnation
Figure 18: UK new registrations of motor vehicles, 2011-16
Company car purchases dominate but are in decline
Figure 19: New car registrations by keeper, 2011-15
Dual and multipurpose vehicles benefit from increased interest
Figure 20: New car registrations, by broad segment, 2011-16
Private buyers switching to lower medium and dual purpose cars
Figure 21: Share of vehicle types amongst private purchasers, 2011-16
Popularity of diesel suffers…
Figure 22: Sales of new cars by fuel type, 2011-16
as interest in purchasing AFVs grows
Figure 23: Hybrid and electric new car registrations (Great Britain), by volume*, 2011-21

CHANNELS TO MARKET
Dealers are growing their share of the overall market…
Figure 24: Sales of new and used car volumes, by channel, 2013-16
as well as the used car market
Figure 25: Sales of new and used car volumes, by channel, 2013-16
Number of dealer outlets record stability
Figure 26: Number of UK franchised dealer outlets, 2000-17
Most major manufacturers have rationalised their site portfolio
Major names dominate the franchised dealer market
Figure 27: Top 10 main dealership groups in the UK, by turnover 2013-15
Independent sector dominated by car supermarkets
Figure 28: Top 10 independent dealership groups in the UK, by turnover, 2015
Renewed interest in the internet
Figure 29: new dedicated manufacturer online portals (UK) since mid-2016

MARKET DRIVERS
Consumer confidence continues to increase
Figure 30: Mintel’s well-being index, February 2009-January 2017
Loan rates remain low…
Figure 31: Monthly percentage values of selected interest rates, January 2008-February 2017
and help to boost consumer lending for car purchases
Figure 32: Value of advances (£mn) on sales of all cars bought on finance by consumers through dealerships, 2011-16
Low levels of inflation assisting car buyers
Figure 33: Annual change in CPI, 2005-16
Insurance costs are on the way up
Figure 34: Average premium for comprehensive car insurance policies, 2012-16
Increased use of public transport
Figure 35: Public transport passenger journeys (Great Britain), 2004/15-2015/16
Number of taxi and private hire licences is growing
Figure 36: Total licensed taxi and private hire vehicles (England and Wales), 2005-15
Car rental continues as a direct alternative to purchasing…
Figure 37: Size of fleet and Number of rentals, 2010-16…while car club membership approaches a quarter of a million
Figure 38: Car club vehicle and membership growth, June 2008-November 2016

COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Mixed fortunes for car manufacturers…
...and for established models
Dealers address customer experience
Online receives increased interest as a sales channel
Advertising expenditure expands

MARKET SHARE
Ford, Vauxhall and Volkswagen suffer a reversal in their fortunes
Premium marques continue to make ground as consumers trade up
Value brands are also growing in popularity illustrative of further polarisation
Figure 39: Manufacturer shares of new car registrations, 2010, 2012, 2014 and 2016
Fragmentation increasingly evident when it comes to model share
Figure 40: Top 10 new car models, 2014-16
Key Ford, Vauxhall and Volkswagen models dominate used car market
Figure 41: Top 10 used car models, 2016

COMPETITIVE STRATEGIES
Moving with the market
Acquisition for growth
Focusing in on customer experience
New ways to reach customers

LAUNCH ACTIVITY AND INNOVATION
Online activity accelerates
Citroën pledges to fix its prices
SEAT looks at greater involvement with potential buyers
Tinder-like app that makes online car shopping simpler

ADVERTISING AND MARKETING ACTIVITY
Expenditure up overall since 2012 albeit with slowdown since 2015
Figure 42: Recorded above-the-line, online display and direct mail total advertising expenditure by UK car dealers, 2012-16
Webuyanycar dominates a market that is slowly consolidating
Figure 43: Leading UK car dealers: Recorded above-the-line, online display and direct mail total advertising expenditure, 2012-16
Old media gives way to new
Figure 44: UK car dealers: Recorded above-the-line, online display and direct mail total advertising expenditure, by media type, 2012-16
Nielsen Ad Intel coverage

THE CONSUMER – WHAT YOU NEED TO KNOW
Car ownership has grown to stand at 71% of the adult population
44% of car owners purchased their vehicle in the last two years
Over half of adults expect to buy a car in the coming three years
Interest in buying a new car has grown recently
Savings and part exchange are the most popular ways of buying a car
Online remains a niche channel although interest is higher amongst certain groups
Petrol is the preferred fuel amongst car buyers
Two thirds of adults are aware of the diesel emission testing scandal

CAR OWNERSHIP
Car owners are in the majority
Figure 45: Car ownership, February 2017
Some adults more than others are likely to own a car
Car ownership climbs between 2015 and 2017
Figure 46: Car ownership, 2015-17
A sizeable percentage of cars have been purchased in the last two years
Figure 47: Statements about car ownership, February 2017
Regional splits evident
Young adults are important buyers
Women show a growing interest in buying new
Rising new car sales impact on this section of the market
Figure 48: Car ownership, 2015-17
Most adults without a car cannot drive
Figure 49: Statements about those not owning a car, February 2017
Age, household size and location are some of the factors affecting those without a car

CAR PURCHASING INTENTIONS
Over half of adults plan to buy a car in the next three years
Figure 50: Intention to purchase a car in the next 3 years, February 2017
Wealth plays a major factor
Full-time employed are key market
Lifestyle changes are important driver
Owners of new cars are more likely to purchase again in the next 3 years
Purchase intentions appear to be weakening…
Figure 51: Intention of purchasing a car/s in the next three years, 2015-17
…with less than half of those planning to purchase expecting to do so in the coming 12 months
Figure 52: Strongest intentions to purchase a car in the next 3 years, February 2017
Income and socio economic status have a big impact on purchasing intentions
Young adults appear less certain about purchasing
Families are important buyers in the coming six months
Cycle of replacement may explain purchasing plans for owners of new and used cars
Stability evident when it comes to purchasing intentions over the coming 3 years
Figure 53: Intention of purchasing a car/s in the next three years, 2015-17
Nearly half plan to buy new in the coming 3 years
Figure 54: Likelihood of new or used purchase, February 2017
Income is a major determinant of buying new
Owners of new cars are more likely to purchase another new car
Buying new records a sizeable increase in popularity since 2015
Figure 55: Intention of purchasing a car/s in the next three years, 2015-17

METHODS OF PAYMENT
Savings and part exchange with an existing vehicle are popular methods of payment
Figure 56: Methods of payment for next car, February 2017
Finance popular with wealthy and middle-aged adults
Savings are important to older adults as well as those that are wealthy
Innovative methods of ownership popular with new car buyers
Use of innovative methods of payment appear to be growing in popularity
Income is a major factor in encouraging interest in other methods of payment

INTEREST IN ONLINE PURCHASING
Cautious interest in buying a car online
Figure 57: Likelihood of buying next car online, February 2017
Certain groups are more likely to favour online…
…with families having an especially strong interest
Online is of greatest interest to owners and buyers of new cars who expect to purchase in the next three years
Independent and dealer websites dominate for online purchasing
Figure 58: Preferred internet channel for future car purchase, February 2017

INTEREST IN FUEL TYPES
Petrol dominates for potential car buyers
Figure 59: Preference for future fuel types, February 2017
Hybrids are the most popular non-fossil fuel power source
Older adults appear wedded to petrol
Popularity of diesel amongst those living in cities continues
Parents and high earners are best target for alternative fuels
Recent car buyers show preference towards diesel as well as hybrid technology to power their next vehicle…
…yet for the wider market of future purchasers it is petrol that is preferred
Older and wealthier adults appear especially flexible when it comes to fuel choices
Petrol sees surge in popularity between 2016 and 2017
Figure 60: Preference for future fuel types, 2016-17

AWARENESS OF ISSUES WITH DIESEL EMISSION TESTING
Majority of adults aware of the diesel emission testing scandal
Figure 61: Awareness of issues with diesel emission testing, February 2017
Age and gender denote clear divisions in awareness
Income also plays a big part in awareness
Those most likely to purchase a car record highest awareness of scandal

APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Data sources
Exclusions
Market sizing and segment performance
Abbreviations
Consumer research methodology

APPENDIX – MARKET SIZE AND FORECAST
New and used car sales
Figure 62: New and used car market volumes, 2011-21
Fan chart forecast

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