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Car and Van Hire - UK - February 2014

“We believe the car and van hire market offers considerable opportunities over the next few years. The sector is set to continue to recover from its recent difficulties with the number of hire days and the value of vehicle hire both forecast to rise. However, as with many markets coming out of the recent economic slowdown, those hiring are set to continue to be preoccupied about costs.”

– Neil Mason, Head of Retail Research

Some questions answered in this report include:

  • Will the hire market benefit from the UK’s expected economic recovery?
  • What threat do car clubs and peer-to-peer hire pose?
  • Does the hire market need to reassess itself?
  • Do you have to advertise to be successful?

The market has been relatively subdued in recent years as car and van hire has been negatively impacted by the recent economic slowdown. Responses from the sector to this malaise have mainly been through competitive activity with this serving to depress revenue growth. Nevertheless the car hire market is currently showing an upturn, benefiting from improvements in consumer confidence as well as the performance of the wider UK economy.

Current market valuations put the short-term car and van hire sector at £2.09 billion in 2012. Annual rental numbers are estimated at over 11 million with the average price per rental at just under £200. Although cars form the largest segment of the market, it is the LCV (Light Commercial Vehicles) sector that represents the more buoyant area of activity. Equally it is the business hire market that is presently performing stronger than personal hire.

The hire market is contested by a large number of companies although it is multinational names such as Enterprise, Budget, Europcar and Hertz that have the strongest presence. Competition is coming in the form of alternatives to vehicle hire with car clubs currently the most established and providing the most obvious threat. Their recent growth has led to a number of hire companies diversifying into this market to offer this type of service.

Mintel’s exclusive research for this report suggests that vehicle hire is a relatively specialist market – around three quarters of UK adults interviewed for the report had not needed to hire a vehicle in the last two years. Of those that have hired, young adults aged 18-34 and those in urban areas are the most important market with moving home or hiring for a holiday in the UK the most popular reasons given. Cost is a critical factor for those looking at vehicle hire with direct and indirect costs both important. Indeed with a sizeable percentage of heavy car hire users also showing a strong interest in rival services such as car sharing, the market seems set to face further challenges.

This report analyses the market for self-drive private and business car and van hire.

The market comprises cars as well as LCVs such as light goods vehicles and minibuses that can be driven without requiring a heavy goods or public service licence.

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Table of contents

  1. Introduction

      • Definition
        • Exclusions
          • Abbreviations
          • Executive Summary

              • The market
                  • Figure 1: UK short-term car and van rental, by value, at current prices, 2008-18
                • Market factors
                  • Companies, brands and innovation
                    • Figure 2: Companies used last when hiring a self-drive car, van or minibus, November 2012
                  • Engaging with the customer
                    • The consumer
                      • Figure 3: Frequency of car, van or minibus hire in the last two years, November 2013
                      • Figure 4: How car, van or minibus hire was arranged, November 2013
                      • Figure 5: Reasons you might hire a self-drive car, van or minibus, November 2013
                      • Figure 6: Hire companies that would be considered for car, van or minibus hire, November 2013
                      • Figure 7: Factors considered most important when hiring a self-drive car, van or minibus in the future, November 2013
                      • Figure 8: Interest in car sharing services, November 2013
                    • What we think
                    • Issues in the Market

                        • How to convert the unconverted
                          • Will the hire market benefit from the UK’s expected economic recovery?
                            • The threat posed by car clubs and peer-to-peer hire
                              • Does the hire market need to reassess itself?
                                • Do you have to advertise to be successful?
                                • Trend Application

                                    • Make it Mine
                                      • Generation Next
                                        • Mintel futures – Old Gold
                                        • Internal Market Environment

                                          • Key points
                                            • Car and van hire remains a specialist market
                                              • Figure 9: Frequency of car, van or minibus hire in the last two years, November 2013
                                            • UK holidays win out over those overseas
                                              • Figure 10: Trends in total number of holiday visits, abroad versus domestic, 2008-12
                                            • Housing market shows signs of recovery
                                              • Figure 11: UK housing transactions and average prices, 2008-12
                                            • Student population continues to expand
                                              • Figure 12: Numbers of full-time undergraduates in UK, 2005/06-2011/12
                                          • Broader Market Environment

                                            • Key points
                                              • UK economy and consumers showing signs of recovery
                                                • Figure 13: GDP, PDI, consumer expenditure and savings, at current prices, 2008-18
                                              • GDP growth will take time to strengthen
                                                • Consumer expenditure set to expand faster
                                                  • Recent GDP performance has been less promising
                                                    • Figure 14: GDP quarterly percentage change, Q1 2006-Q2 2013
                                                  • UK population moving socially downward
                                                    • Figure 15: Forecast adult population trends, by socio-economic group, 2008-18
                                                  • An ageing population
                                                    • Figure 16: Trends in the age structure of the UK population, 2008-18
                                                • Competitive Context

                                                  • Key points
                                                    • Car ownership remains a major expense
                                                      • Figure 17: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2009-12
                                                    • Costs of running a vehicle record overall increase
                                                      • Figure 18: Annual percentage change in transport costs, 2006-12
                                                    • Used car prices perform better than those for new vehicles
                                                      • Figure 19: Price indices of new and used cars, 1996-2012
                                                    • Fuels and lubricants suffer the strongest price rises...
                                                      • Figure 20: Indices of personal transport prices, 2006-12
                                                    • ...although this has been tempered recently by stability
                                                      • Figure 21: Monthly UK petrol, diesel and oil price trends, January 2009-November 2013
                                                    • Alternatives to rental represent an emerging threat
                                                      • Car clubs
                                                        • Figure 22: Car club vehicle and member growth, June 2008-November 2013
                                                      • Peer-to-peer car rental
                                                        • Lift sharing
                                                        • Strengths and Weaknesses in the Market

                                                          • Strengths
                                                            • Weaknesses
                                                            • Who’s Innovating?

                                                              • Key points
                                                                • Car hire sector begins to diversify
                                                                  • Exploiting new segments of the market
                                                                    • Improved service to customers
                                                                    • Market Size and Forecast

                                                                      • Key points
                                                                        • Short-term car rental market showing signs of recovery
                                                                          • Figure 23: Value of personal and business short-term car and van rental, 2008-13
                                                                        • Demand for rentals hit by recent recession...
                                                                          • Figure 24: Number of rentals, number of hire days and average spend per rental, 2008-13
                                                                        • ...with fleet sizes also contracting
                                                                          • Figure 25: Volume of personal and business short-term car and van fleet, 2008-13
                                                                        • The future
                                                                          • Figure 26: UK short-term car and van rental, by value, at current prices, 2008-18
                                                                        • Forecast
                                                                          • Figure 27: UK short-term car and van rental, by value, at current prices, 2008-18
                                                                      • Market Segmentation

                                                                        • Key points
                                                                          • Pressure on market value is greatest for car hire segment
                                                                            • Figure 28: Value of personal and business short-term car and van rental, by vehicle type, 2008-12
                                                                          • Business dominates short-term hire market
                                                                            • Figure 29: Value of personal and business short-term car and van rental, by rental type, 2008-12
                                                                          • Consumers seeking out value
                                                                            • Recovery of market evident by growth in premium and specialist vehicles
                                                                            • Market Share

                                                                              • Key points
                                                                                • Multinationals dominate with Enterprise a clear leader
                                                                                  • Figure 30: Companies used last when hiring a self-drive car, van or minibus, November 2012
                                                                                • Arnold Clark has the largest fleet
                                                                                  • Figure 31: UK fleet size of selected car rental companies, 2012
                                                                                • Car sharing – also dominated by major names
                                                                                • Companies

                                                                                  • Car and van hire companies
                                                                                    • Enterprise Rent-A-Car
                                                                                        • Figure 32: Key financial data for Enterprise Rent-A-Car UK Limited, 2010-12
                                                                                      • Alamo Rent A Car
                                                                                        • National Car Rental
                                                                                          • Europcar
                                                                                              • Figure 33: Key financial data for Europcar Group UK Limited, 2010-2012
                                                                                            • Hertz
                                                                                                • Figure 34: Key financial data for Hertz UK Limited, 2010-12
                                                                                              • Thrifty Car and Van Rental
                                                                                                  • Figure 35: Key financial data for Scot Group (Thrifty), 2011-13
                                                                                                • Avis
                                                                                                    • Figure 36: Key financial data for Avis Rent A Car Limited, 2010-12
                                                                                                  • Budget Rent a Car
                                                                                                    • Sixt
                                                                                                        • Figure 37: Key financial data for Sixt Kenning limited, 2010-12
                                                                                                      • easyCar
                                                                                                        • Arnold Clark
                                                                                                            • Figure 38: Key financial data for Arnold Clark Finance Limited, 2010-12
                                                                                                          • Practical Car and Van Rental
                                                                                                            • Ford Car Rentals
                                                                                                              • Specialist van hire companies
                                                                                                                • Northgate Vehicle Hire
                                                                                                                  • Salford Van Hire
                                                                                                                    • Car share and peer-to-peer companies
                                                                                                                      • Zipcar
                                                                                                                      • Brand Communication and Promotion

                                                                                                                        • Key points
                                                                                                                          • Promotional expenditure picking up
                                                                                                                            • Figure 39: Main monitored media advertising expenditure on self-drive vehicle hire, 2008-13
                                                                                                                          • Enterprise dominates the market
                                                                                                                            • Figure 39: Main monitored media advertising expenditure on self-drive vehicle hire, top 10 companies, 2009-13
                                                                                                                          • Enterprise dominates amongst established names
                                                                                                                            • Investment by other companies is growing
                                                                                                                              • Media strategies vary
                                                                                                                                • Figure 40: Main monitored media advertising expenditure on self-drive vehicle hire companies, by media type, 2009-12
                                                                                                                              • Television grows its share of advertising
                                                                                                                                • Figure 41: Main monitored media advertising expenditure on self-drive vehicle hire, by media type, 2009-13
                                                                                                                            • Channels to Market

                                                                                                                              • Key points
                                                                                                                                • Outlet numbers vary widely
                                                                                                                                  • Figure 42: Selected UK car rental companies, by number of outlets, 2013*
                                                                                                                                • Avis pursues a policy of rapid expansion
                                                                                                                                  • Figure 43: Selected UK car rental companies, by number of outlets, 2010-13
                                                                                                                                • Ways of operating in the hire market
                                                                                                                                  • Car hire franchising
                                                                                                                                    • Licensee marketing
                                                                                                                                      • Affiliate marketing
                                                                                                                                        • Brokers
                                                                                                                                        • The Consumer – Frequency of Hiring

                                                                                                                                          • Key points
                                                                                                                                            • Nearly three quarters of adults haven’t hired in the last two years
                                                                                                                                                • Figure 44: Frequency of car, van or minibus hire in the last two years, November 2013
                                                                                                                                              • Men more likely to hire than women
                                                                                                                                                • Multiple car hire popular with young and Londoners
                                                                                                                                                  • Income and household size also impact on hire history
                                                                                                                                                  • The Consumer – How Hire was Arranged

                                                                                                                                                    • Key points
                                                                                                                                                      • Buying online proves the most popular method for purchasing
                                                                                                                                                          • Figure 45: How car, van or minibus hire was arranged, November 2013
                                                                                                                                                        • Older and younger age groups have different approaches when booking
                                                                                                                                                          • City dwellers and more affluent prefer to book direct
                                                                                                                                                            • Do wealthier adults plan ahead?
                                                                                                                                                            • The Consumer – Future Reasons for Hiring

                                                                                                                                                              • Key points
                                                                                                                                                                • Moving home leads as the main reason for hiring
                                                                                                                                                                    • Figure 46: Reasons you might hire a self-drive car, van or minibus, November 2013
                                                                                                                                                                  • Women are less likely to want to hire
                                                                                                                                                                    • Young adults represent a sweet spot for hiring
                                                                                                                                                                      • Urbanites want to hire for particular reasons
                                                                                                                                                                        • High income earners have more complex demands
                                                                                                                                                                          • Interest in specific reasons for hiring dip back
                                                                                                                                                                            • Figure 47: Main reasons for hiring a car, van or minibus in the future, 2012&2013
                                                                                                                                                                          • Those hiring frequently are most likely to want a vehicle for a UK holiday
                                                                                                                                                                            • Figure 48: Reasons for car/van/minibus hire, by frequency of car/van/minibus hire, November 2013
                                                                                                                                                                          • Smaller companies win out for more specialist demands
                                                                                                                                                                            • Figure 49: Reasons for car/van/minibus hire, by most popular companies considered for car/van/minibus hire, November 2013
                                                                                                                                                                            • Figure 50: Reasons for car/van/minibus hire, by next most popular companies considered for car/van/minibus hire, November 2013
                                                                                                                                                                        • The Consumer – Use of Hire Companies

                                                                                                                                                                          • Key points
                                                                                                                                                                            • Enterprise has the greatest appeal with potential users
                                                                                                                                                                                • Figure 51: Hire companies that would be considered for car, van or minibus hire, November 2013
                                                                                                                                                                              • Major names popular with men, young adults and the wealthy
                                                                                                                                                                                • Less well-known hire companies slip back in minds of hirers
                                                                                                                                                                                  • Figure 52: Hire companies that would be considered for car, van or minibus hire, 2012 and 2013
                                                                                                                                                                                • Smaller rental companies lag in going digital
                                                                                                                                                                                  • Figure 53: Companies considered for car/van/minibus hire, by how car/van/minibus hire reservation was made, November 2013
                                                                                                                                                                              • The Consumer – Factors That Are Important When Hiring

                                                                                                                                                                                • Key points
                                                                                                                                                                                  • Financial factors dominate issues with respect to car hire
                                                                                                                                                                                      • Figure 54: Factors considered most important when hiring a self-drive car, van or minibus in the future, November 2013
                                                                                                                                                                                    • Older adults are more demanding
                                                                                                                                                                                      • Londoners record low importance for some key factors...
                                                                                                                                                                                        • ...with the opposite the case for those on low incomes or living in rural areas
                                                                                                                                                                                          • Light users of hire services are most demanding
                                                                                                                                                                                            • Figure 55: Factors important when hiring a car/van/minibus, by frequency of car/van/minibus hire, November 2013
                                                                                                                                                                                          • Fuel and insurance charges are most important for those hiring only once in last two years
                                                                                                                                                                                            • Service factors find near universal appeal
                                                                                                                                                                                              • Heavy users of car/van hire want specific features
                                                                                                                                                                                                • Certain occasions see hirers demand more
                                                                                                                                                                                                  • Figure 56: Factors important when hiring a car/van/minibus, by reasons for car/van/minibus hire, November 2013
                                                                                                                                                                                                • Some hire companies viewed as offering a better deal
                                                                                                                                                                                                  • Figure 57: Factors important when hiring a car/van/minibus, by most popular companies considered for car/van/minibus hire, November 2013
                                                                                                                                                                                                  • Figure 58: Factors important when hiring a car/van/minibus, by next most popular companies considered for car/van/minibus hire, November 2013
                                                                                                                                                                                              • The Consumer – Interest in Car Sharing

                                                                                                                                                                                                • Key points
                                                                                                                                                                                                  • High level of interest in use of car sharing
                                                                                                                                                                                                      • Figure 59: Interest in car sharing services, November 2013
                                                                                                                                                                                                    • London remains key market for car sharing...
                                                                                                                                                                                                      • ...with young adults also an important market
                                                                                                                                                                                                        • Income and socio-economic status have an impact
                                                                                                                                                                                                          • Environmental benefits of car sharing have broad appeal
                                                                                                                                                                                                            • Car sharing is more popular with certain groups of hirers
                                                                                                                                                                                                              • Figure 60: Statements about car sharing, by frequency of car/van/minibus hire, November 2013
                                                                                                                                                                                                            • Many heavy users of car hire have also used car sharing
                                                                                                                                                                                                              • Environmental benefits are a key hook for the car sharing market
                                                                                                                                                                                                                • Development of car sharing may lie in van sharing
                                                                                                                                                                                                                  • Figure 61: Statements about car sharing, by most popular reasons for car/van/minibus hire, November 2013
                                                                                                                                                                                                                  • Figure 62: Statements about car sharing, by next most popular reasons for car/van/minibus hire, November 2013
                                                                                                                                                                                                              • Appendix – The Consumer – Frequency of Hiring

                                                                                                                                                                                                                  • Figure 63: Frequency of car/van/minibus hire, by demographics, November 2013
                                                                                                                                                                                                              • Appendix – The Consumer – How Hire was Arranged

                                                                                                                                                                                                                  • Figure 64: How car/van/minibus hire reservation was made, by demographics, November 2013
                                                                                                                                                                                                              • Appendix – The Consumer – Future Reasons for Hiring

                                                                                                                                                                                                                  • Figure 65: Most popular reasons for car/van/minibus hire, by demographics, November 2013
                                                                                                                                                                                                                  • Figure 67: Next most popular reasons for car/van/minibus hire, by demographics, November 2013
                                                                                                                                                                                                              • Appendix – The Consumer – Use of Hire Companies

                                                                                                                                                                                                                  • Figure 66: Most popular companies considered for car/van/minibus hire, by demographics, November 2013
                                                                                                                                                                                                                  • Figure 67: Next most popular companies considered for car/van/minibus hire, by demographics, November 2013
                                                                                                                                                                                                              • Appendix – The Consumer – Factors That are Important When Hiring

                                                                                                                                                                                                                  • Figure 68: Most popular factors important when hiring a car/van/minibus, by demographics, November 2013
                                                                                                                                                                                                                  • Figure 69: Next most popular factors important when hiring a car/van/minibus, by demographics, November 2013
                                                                                                                                                                                                                  • Figure 70: Other factors important when hiring a car/van/minibus, by demographics, November 2013
                                                                                                                                                                                                              • Appendix – The Consumer – Interest in Car Sharing

                                                                                                                                                                                                                  • Figure 71: Statements about car sharing, by demographics, November 2013

                                                                                                                                                                                                              Companies Covered

                                                                                                                                                                                                              • Alamo Rent a Car LLC
                                                                                                                                                                                                              • Arnold Clark Automobiles Ltd
                                                                                                                                                                                                              • Audi United Kingdom
                                                                                                                                                                                                              • Avis Budget Group, Inc.
                                                                                                                                                                                                              • Avis Europe plc
                                                                                                                                                                                                              • B&Q (UK & Ireland)
                                                                                                                                                                                                              • BMW (GB) Ltd
                                                                                                                                                                                                              • British Broadcasting Corporation (BBC)
                                                                                                                                                                                                              • Chrysler LLC
                                                                                                                                                                                                              • Dollar Thrifty Automotive Group, Inc.,
                                                                                                                                                                                                              • Energy Saving Trust
                                                                                                                                                                                                              • Enterprise Rent-A-Car Company
                                                                                                                                                                                                              • Europcar International
                                                                                                                                                                                                              • Ferrari S.p.A.
                                                                                                                                                                                                              • Ford Motor Company Limited (UK)
                                                                                                                                                                                                              • Kia Motors UK Ltd
                                                                                                                                                                                                              • Mercedes-Benz UK
                                                                                                                                                                                                              • National Car Rental
                                                                                                                                                                                                              • Porsche Cars Great Britain Ltd
                                                                                                                                                                                                              • Sixt AG
                                                                                                                                                                                                              • The Colt Car Company Ltd (Mitsubishi Motors UK)
                                                                                                                                                                                                              • The Hertz Corporation
                                                                                                                                                                                                              • Thrifty Car Rentals
                                                                                                                                                                                                              • Toyota (GB) PLC
                                                                                                                                                                                                              • Vauxhall Motors Ltd
                                                                                                                                                                                                              • Volkswagen AG
                                                                                                                                                                                                              • Volkswagen UK
                                                                                                                                                                                                              • Zipcar, Inc.

                                                                                                                                                                                                              Car and Van Hire - UK - February 2014

                                                                                                                                                                                                              £1,995.00 (Excl.Tax)