Sorry for interrupting, this website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Learn more
Accept & Close

Car Finance - UK - May 2016

“Car finance has benefitted from a dramatic expansion in its popularity in recent years. Fuelled by innovations such as PCP (Personal Contract Purchase) as well as the development of retail leasing products, both the volume and value of car finance contracts sold have seen unprecedented expansion. With car market volumes and the prospects for the UK economy set to remain favourable, further growth in this market is forecast.”
– Deborah Osguthorpe, Head of UK Financial Services Research

This report examines the following areas:

  • Potential offered by the used car sector
  • Evolution of car finance market will continue
  • Preparing for the worst

Car finance has traditionally played a greater role within the new car market with the high price of many new vehicles encouraging many buyers to look at credit to fund/part fund their purchase. Low rates of interest and the development of new products such as PCP (Personal Contract Purchase) and lease hire in recent years have increased the percentage of purchases made through such products.

To offer an insight into the market, this Report also presents the results of exclusive research into several aspects of buyer behaviour when it comes to car finance. These include a review of the importance of car finance alongside other methods of financing the purchase of a vehicle by private buyers as well as the likelihood of car buyers using car finance products over the coming 12 months. Views on the value for money of different types of providers offering car finance are presented as well as consumer thoughts on various statements associated with car finance.

For the purposes of this Report, the point-of-sale car finance market, like the wider car retail market, is divided into two main sectors: new and used.

What you get

What's included

Why buy from us?

Succeed

Our reports will provide you with market data, consumer research and competitive intelligence to succeed in your market.

Instant Access

Buy now and you'll have instant access to the information you need to make the right decisions.

Opportunities

Find out what's next in the markets that matter to you: where opportunities lie and what challenges you will face.

Trusted

A business Superbrand, Mintel is a source you can trust. We have been defining and refining the Market Intelligence mix since 1972.

Table of contents

  1. Overview

    • What you need to know
      • Products covered in this report
      • Executive Summary

          • The market
            • Expansion of the market is set to continue
              • Figure 1: Value of car finance contracts sold through dealerships (private sector only) – Fan chart, 2010-20
              • Figure 2: Volume of car finance contracts sold through dealerships (private sector only) – Fan chart, 2010-20
            • Use of finance growing in both new and used car markets
              • PCP dominates market with leasing recording strong growth for new car sales
                • Figure 3: New and used private car finance by product type (value), 2016*
              • Companies and brands
                • Small number of companies dominate the market
                  • Figure 4: Leading finance providers for new cars (Dealer sales)*, 2015
                • PCP, HP and leasing are offered by many of the leading car finance companies
                  • Upward trend in advertising expenditure
                    • The consumer
                      • A third of buyers are interested in leasing a car
                        • Figure 5: Car finance, February 2016
                      • Savings are the most popular method of paying for a car
                        • Figure 6: Car payment methods, February 2016
                      • Many users have a conservative approach towards car finance
                        • Figure 7: Use of loan or finance agreements, February 2016
                      • Not all organisations offered car finance are viewed the same
                        • Figure 8: Performance of organisations offering loans/finance by value for money, February 2016
                      • Mixed viewed towards statements associated with car finance
                        • Figure 9: Statements about car finance, February 2016
                      • What we think
                      • Issues and Insights

                        • Potential offered by the used car sector
                          • The facts
                            • The implications
                              • Evolution of car finance market will continue
                                • The facts
                                  • The implications
                                    • Preparing for the worst
                                      • The facts
                                        • The implications
                                        • The Market – What You Need to Know

                                          • Strong growth reported in car finance …
                                            • … with new cars a more valuable market
                                              • Strong car sales vital for market
                                                • PCP dominates the car finance market
                                                  • Dealers account for two thirds of car sales
                                                  • Market Size and Forecast

                                                    • Car finance outperforms car sales
                                                      • Figure 10: Volume and value of car finance contracts sold through dealerships (private sector only), 2010-15
                                                    • Further expansion of the market expected
                                                      • Figure 11: Volume and value of car finance contracts sold through dealerships (private sector only) – 2010-20
                                                      • Figure 12: Value of car finance contracts sold through dealerships (private sector only) – Fan chart, 2010-20
                                                      • Figure 13: Volume of car finance contracts sold through dealerships (private sector only) – Fan chart, 2010-20
                                                    • Forecast Methodology
                                                    • Market Segmentation

                                                      • Strong growth for both new and used finance
                                                        • Figure 14: Volume and value of private car finance contracts sold via dealerships, segmented by new and used cars, 2010-15
                                                      • Finance penetration surpasses 80% of new car sales
                                                        • Figure 15: Proportion of new private car sales bought with a car finance agreement, 2010-15
                                                      • Limited, if growing presence, for used car finance
                                                          • Figure 16: Proportion of used car sales bought with a car finance agreement, 2010-15
                                                        • Leasing and PCP are proving important drivers for the market …
                                                            • Figure 17: New and used private car finance by product type (value), 2015-16*
                                                          • … although both have their limitations
                                                          • Channels to Market

                                                            • Franchised dealers dominate within the overall market
                                                              • Figure 18: Sales of new and used cars by channel (by volume), 2013-15
                                                            • Main dealers dominate the consumer market
                                                              • Figure 19: Where was last car purchased, February 2016
                                                          • Market Drivers

                                                            • Car market records upward trend in sales
                                                              • Figure 20: New and used car market volumes, 2010-15
                                                            • New car market showing signs of slowdown
                                                              • Figure 21: Best- and worst-case forecasts for UK new and used sales, 2010-20
                                                            • Private sales represent an important market
                                                              • Figure 22: UK new registrations of motor vehicles, 2010-15
                                                            • Performance of the UK economy proving helpful
                                                              • Figure 23: Mintel’s wellbeing index, February 2009 - November 2015
                                                            • Over half of adults plan to buy a car in the next three years
                                                              • Figure 24: Intention to purchase a car/s in the next three years, February 2016
                                                            • No obvious preference for buying new or used
                                                              • Figure 25: Intention to purchase a car/s in the next three years, by new or second-hand purchase, February 2016
                                                            • Falling interest rates on unsecured loans suggests stronger competition for finance providers
                                                              • Figure 26: Monthly percentage values of selected interest rates. January 2009-February 2016
                                                            • PCP injects new life into the market
                                                              • FCA consumer credit regime continues to evolve
                                                              • Companies and Brands – What You Need to Know

                                                                • Most car manufacturers have their own in-house finance company
                                                                  • Product and partnership strategies are both important
                                                                    • Technology and flexibility dominate innovations
                                                                      • Promotional expenditure is increasing
                                                                      • Market Share

                                                                        • Manufacturers take a leading role in the market
                                                                          • Figure 27: Manufacturer shares of new car registrations, 2015
                                                                        • VW and Ford account for a third of dealer finance
                                                                          • Figure 28: Leading finance providers for new cars (Dealer sales)*, 2015
                                                                      • Competitive Strategies

                                                                        • A tale of two markets
                                                                          • Use of partnerships
                                                                            • Offering a range of products
                                                                                • Figure 29: Finance products offered by leading players in car market (manufacturer subsidiary and specialist providers), 2016
                                                                              • Developing new services and markets
                                                                              • Launch Activity and Innovation

                                                                                • Ford looks towards group ownership of a vehicle
                                                                                  • Close Brothers introduces referral service for dealers
                                                                                    • Alphera also looking to help the dealer market
                                                                                      • Black Horse streamlines applications with SignIt …
                                                                                        • … while Halifax customers benefit from a new online finance facility
                                                                                          • Scrappage and finance
                                                                                            • Honda working with Arval to develop contract hire
                                                                                            • Advertising and Marketing Activity

                                                                                              • Upward trend in advertising expenditure
                                                                                                • Figure 30: Total above-the-line, online display and direct mail advertising expenditure on car finance and related loan products, 2012-16
                                                                                              • Majority of expenditure directed towards loans
                                                                                                • Figure 31: Total above-the-line, online display and direct mail advertising expenditure on car finance and related loan products, 2012-16
                                                                                              • PCP grows to dominate activity within car finance sector
                                                                                                • Figure 32: Total above-the-line, online display and direct mail advertising expenditure on car finance (motor manufacturer finance and personal contract plans), 2012-16
                                                                                              • Two companies dominate the market
                                                                                                • Figure 33: Top five advertisers in the car finance market (above-the-line, online display and direct mail advertising) 2016
                                                                                              • Television advertising increasing its profile
                                                                                                • Figure 34: Total above-the-line, online display and direct mail advertising expenditure on car finance, by media type, 2015- 16
                                                                                              • Nielsen Ad Intel coverage
                                                                                              • The Consumer – What You Need to Know

                                                                                                • Two thirds of adults own a car
                                                                                                  • A third of buyers are interested in leasing a vehicle
                                                                                                    • Savings are the preferred method of paying for a car
                                                                                                      • Familiarity with a finance product is important for many
                                                                                                        • Banks, building societies and dealerships all perform well
                                                                                                          • Fixed monthly payments are popular
                                                                                                          • Car Ownership

                                                                                                            • Two thirds of adults own a car
                                                                                                              • Figure 35: Car ownership, February 2016
                                                                                                            • Older cars dominate the market
                                                                                                              • Figure 36: 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
                                                                                                                    • Many of those without a car also do not hold a driving licence
                                                                                                                      • Figure 37: Statements about car use by those not owning a car, February 2016
                                                                                                                    • Low earners and women are least likely to drive
                                                                                                                    • Car Finance

                                                                                                                      • Around a third of buyers are interested in leasing a car
                                                                                                                        • Figure 38: Car finance, February 2016
                                                                                                                      • Leasing is popular with high income earners
                                                                                                                        • Young adults have a strong interest in leasing a used car
                                                                                                                          • Lease appeal is strong amongst those living in urban areas
                                                                                                                            • Families find leasing of interest
                                                                                                                            • Methods of Paying for a Car

                                                                                                                              • Savings dominate as a method of payment
                                                                                                                                • Figure 39: Car payment methods, February 2016
                                                                                                                              • Different age groups prefer different payment methods
                                                                                                                                • Wealthy are more likely to opt for loan or lease agreement …
                                                                                                                                  • … although contract hire and PCP have broad appeal
                                                                                                                                    • Car finance popular with other groups
                                                                                                                                      • Age and income both impact on number of payment methods used
                                                                                                                                      • Use of Loan and Finance Agreements

                                                                                                                                        • Past use and research are important factors affecting choice of finance
                                                                                                                                          • Figure 40: Use of loan or finance agreements, February 2016
                                                                                                                                        • Men and women have different perspectives on car finance
                                                                                                                                          • Demands of ABC1s force their use of particular finance products
                                                                                                                                            • Families are more likely to plan ahead
                                                                                                                                            • Performance of Lending Organisations

                                                                                                                                              • Financial institutions score well where the buyer has an account
                                                                                                                                                • Figure 41: Performance of organisations offering loans/finance by value for money, February 2016
                                                                                                                                              • Banks and building societies fail to appeal strongly with women
                                                                                                                                              • Statements about Car Finance

                                                                                                                                                • Views on car finance suggest interest in a variety of different package types
                                                                                                                                                  • Figure 42: Statements about car finance, February 2016
                                                                                                                                                • Car finance of interest to young adults …
                                                                                                                                                  • … with many wanting the flexibility it offers
                                                                                                                                                    • Fixed and reduced payments are important for ABC1s
                                                                                                                                                      • Parents appear worried about costs
                                                                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                          • Abbreviations
                                                                                                                                                            • Consumer research methodology
                                                                                                                                                            • Appendix – Market Size and Forecast

                                                                                                                                                              • Forecast Data
                                                                                                                                                                • Figure 43: Forecast of private car finance plans (value) – best and worst case scenarios, 2015-20
                                                                                                                                                                • Figure 44: Forecast of private car finance plans for new cars (value) – best and worst case scenarios, 2015-20
                                                                                                                                                                • Figure 45: Forecast of private car finance plans for used cars (value) – best and worst case scenarios, 2015-20
                                                                                                                                                                • Figure 46: Forecast of private car finance plans (volume) – best and worst case scenarios, 2015-20
                                                                                                                                                                • Figure 47: Forecast of private car finance plans for new cars (volume) – best and worst case scenarios, 2015-20
                                                                                                                                                                • Figure 48: Forecast of private car finance plans for used cars (volume) – best and worst case scenarios, 2015-20
                                                                                                                                                              • Forecast Methodology

                                                                                                                                                              Companies Covered

                                                                                                                                                              To learn more about the companies covered in this report please contact us.

                                                                                                                                                              Car Finance - UK - May 2016

                                                                                                                                                              £1,995.00 (Excl.Tax)