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The Car Purchasing Process - UK - April 2016

Published By :

Mintel

Published Date : Apr 2016

Category :

Banking

No. of Pages : N/A

Car sales reached a new high of 9.93 million units in 2015 helped by a strong economy, low interest rates and the actions of manufacturers and retailers to encourage purchases. Looking ahead, although the market is showing signs of stability there remains considerable interest in purchasing a car. Around half of adults are set to buy in the coming three years with half of these purchases coming within the next 12 months.

Table of Content

Overview

What you need to know
Products covered in this Report

Executive Summary

The market
UK car purchases drive sales towards 10 million units per annum
Figure 1: UK new car sales, by volume, 2010-20
Used car sales dominate the market
Figure 2: New and used car market volumes, 2010-15
Franchised dealers account for nearly half of all purchases
Figure 3: Sales of new and used cars, by channel, 2015
Companies and brands
Ford and Vauxhall remain the most popular brands in the new car market
Dealers and manufacturers look to reduce costs
Investment in advertising and promotion is growing
Figure 4: Recorded above-the-line, online display and direct mail total advertising expenditure by UK car dealers, 2011-15
The consumer
Two thirds of adults own a car
Figure 5: Car ownership, February 2016
Majority of cars in ownership are over two years old
Figure 6: Statements about car ownership, February 2016
Main dealers account for around half of sales
Figure 7: Where was last car purchased, February 2016
Just over half of adults plan to purchase a car in the next three years
Figure 8: Intention of purchasing a car/s in the next three years, February 2016
Brake assistance/collision avoidance is most widely sought technical option
Figure 9: Interest in driver assistance technology, February 2016
Hybrid and electric power are more than just niche technologies
Figure 10: Preferences for fuel types, February 2016
What we think

Issues and Insights

Growth in car sales slows after recent strong increases
The facts
The implications
Alternative-fuelled vehicles finally achieving breakthrough
The facts
The implications
Variable interest in in-car technology
The facts
The implications

The Market – What You Need to Know

Car purchases approach 10 million units a year
Low rates of finance increase affordability of car ownership
Falling costs of car ownership also assisting market
Used car sales dominate the market
Buyers opt towards purchasing smaller cars
Recent strong demand for new car sales boosts profile of franchised dealers

Market Size and Forecast

Growth in sales results in market reaching all-time high
Figure 11: Best- and worst-case forecasts for UK new and used sales, 2010-20
Figure 12: UK new and used sales, 2010-20
Forecast methodology

Market Segmentation

Used sales account for nearly three quarters of purchases
Figure 13: New and used car market volumes, 2010-15
Private sales are especially buoyant within the new car market
Figure 14: UK new registrations of motor vehicles, 2010-15
Smaller cars dominate new car purchases…
Figure 15: New car registrations, by broad segment (share), 2010-15
boosted by demand from private buyers
Figure 16: Share of vehicle types amongst private purchasers, 2011-15
Dealers account for the majority of used car sales
Figure 17: UK used sales of motor vehicles, by seller, 2010-15
Petrol vehicles account for a declining share of new and used sales
Figure 18: Sales of new and used cars, by fuel type, 2010-15

Channels to Market

Franchised dealers dominate the overall market
Figure 19: Sales of new and used cars, by channel, 2013-15
Franchised dealer network showing signs of stability
Figure 20: Number of UK franchised dealer outlets, 2000-16
Most major manufacturers have rationalised their site portfolio
Figure 21: Top 10 dealers, by brand, 2010-16
Major names dominate the sector
Figure 22: Top 10 main dealership groups in the UK, by turnover, 2014
Independent sector dominated by car supermarkets
Figure 23: Top 10 independent dealership groups in the UK, by turnover and unit sales, 2014
The internet fails to develop as a mainstream sales channel

Market Drivers

Improvements in consumer confidence evident
Figure 24: Mintel’s wellbeing index, February 2009-November 2015
Cost of finance continues to fall
Figure 25: Monthly percentage values of selected interest rates, January 2008-February 2015
Falling inflation likely to be proving helpful
Figure 26: Annual change in CPI, 2005-15
Net lending for car purchases continues to increase
Figure 27: Value of advances (£mn) on sales of all cars bought on finance by consumers through dealerships, 2011-15
Used car prices tumble…
Figure 28: Price indices of new and used cars, 2004-15
as does that of fuel
Figure 29: Typical retail prices of petroleum products in the UK, January 2013-November 2015
Number of larger households increases steadily
Figure 30: Changes in single and multi-person households, 2006-15
Car rental continues as a direct alternative to purchasing…
Figure 31: Number of rentals, 2010-15
as well as new methods based on pay-as-you-go access
Figure 32: Car club vehicle and membership growth, June 2008-November 2015

Key Players – What You Need to Know

Major manufacturers lose out to smaller rivals
Smaller models are proving popular
Variety of strategies and tactics adopted by sellers
Efforts to encourage sales focus on the innovative
Advertising and promotional support is increasing

Market Share

A dynamic market where many established manufacturers have lost out
Ford and Vauxhall slump and now account for just under a quarter of sales
German manufacturers are amongst the more successful of other companies in the market…
as are a new wave of Asian imports
Many established companies are suffering from a fall in market share
Some manufacturers benefit from a turnaround in sales
Figure 33: Manufacturer shares of new car registrations, 2009-15
Buyers are more likely to purchase smaller cars
Figure 34: Top 10 car models, 2015

Competitive Strategies

Market innovations
Use of promotions
Partnerships to extend market reach
Acquisition strategies
Increasing physical presence in the market

Launch Activity and Innovation

3D car configurator brings the car buying experience to life
Augmented reality dealership showrooms
App to encourage customers through the buying process
BMW makes buying a car online easier and more convenient
Drive Motors makes it possible for any car dealer to sell online
Web-based peer-to-peer marketplace for buying and selling used cars
Fixed-cost motoring package for teenage drivers
60-minute dealership experience
Beacon technology
Car vending machine
Figure 35: Carvana automated, coin-operated car vending machine, Tennessee, US

Advertising and Marketing Activity

Figure 36: Recorded above-the-line, online display and direct mail total advertising expenditure by UK car dealers, 2011-15
Biggest car dealer advertisers
Figure 37: Leading UK car dealers: Recorded above-the-line, online display and direct mail total advertising expenditure, 2011-15
Radio and TV dominate
Figure 38: UK car dealers: Recorded above-the-line, online display and direct mail total advertising expenditure, by media type, 2011-15
Nielsen Ad Intel coverage

The Consumer – What You Need to Know

Two thirds of adults own a car
Certain groups are more likely to have recently purchased a car
Dealers are the preferred channel for purchasing
Over half of households likely to buy a car in next three years
Parking assistance technology is most popular with drivers
Alternative fuels record sizeable niche interest

Car Ownership

Two thirds of adults own a car
Figure 39: Car ownership, February 2016
Certain adults are more likely than others to own a car
Older cars dominate the market
Figure 40: Statements about car ownership, February 2016
New cars popular with men
Young adults are more likely to be recent purchasers
Income plays a major factor in choice of vehicle
New cars popular with urban buyers
New car owners are the best prospects are future buyers
Fewer recent purchases accounted for by second-hand cars
Figure 41: Statements about car ownership, 2014 and 2016
Many of those without a car also do not hold a driving licence
Figure 42: Statements about car use by those not owning a car, February 2016
Low earners and women are least likely to drive

Where Last Car Was Purchased

Main dealers dominate the market
Figure 43: Where last car was purchased, February 2016
Wealthier and older adults are more likely to have purchased from dealers
Private sellers popular with young and those on a budget
Other channels have a much broader appeal
Dealers strengthening their presence within the market
Figure 44: Where last car was purchased, 2012-16

Future Car Purchasing

Over half of adults plan to buy a car in the next three years
Figure 45: Intention of purchasing a car/s in the next three years, February 2016
Young adults have strongest purchasing intentions
Household size also impacts purchasing plans
Income also plays its part
Purchase intentions appear to be weakening
Figure 46: Intention of purchasing a car/s in the next three years, 2014-16
Half of those buying in the next three years plan to purchase in the coming 12 months
Figure 47: Timeframe for future car purchase, February 2016
Parents with children have a more immediate desire to purchase
More planned purchases expected in the coming six months
Figure 48: Intention of purchasing a car/s in the next three years, 2014-16
No obvious preference towards buying new or used
Figure 49: Intention of purchasing a car/s in the next three years, by new or second-hand purchase, February 2016
Wealthy and older adults are more likely to be buying new
Second-hand cars have a much broader appeal

Interest in Driver Assistance Technology

Parking assistance proves most popular
Figure 50: Interest in driver assistance technology, February 2016
Income plays its part in affecting interest
Young drivers favour technology to assist driving…
while oldest focus on parking and collision avoidance
Urban drivers interested in technology to help their driving
New car owners show strong interest in ways to enhance their driving through new technology
Multiple technical enhancements popular with older and wealthier adults

Preferences for Fuel Types

Interest in other fuel sources is growing
Figure 51: Preferences for fuel types, February 2016
Men are receptive to new fuels
Income plays a major part in generating interest
Few differences amongst urban and rural drivers towards pure electric and plug-in hybrid vehicles
Potential to achieve increased AFV sales amongst undecided purchasers
Rural drivers record strong interest in multiple fuel sources

Appendix – Data Sources, Abbreviations and Supporting Information

Data sources
Exclusions
Market sizing and segment performance
Fan chart forecast
Abbreviations
Consumer research methodology

List of Table

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