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Car Ownership and Purchasing in Europe - August 2009

  • The collapse in car sales in Europe in 2008 led to the introduction of car sales and scrappage incentive schemes which have to date been introduced in each of the four markets analysed in this report. Similar schemes introduced by France in the mid 90s indicate that when the schemes end, sales fall back to pre-incentive levels. The report looks at what the impact of the scrappage schemes have been on the car markets in Germany, France the UK and Spain.
  • Purchases of new cars in each of the four countries analysed by the report are generally skewed to the over 45 age and lifestage groups while used car purchases purchases are skewed to the under 45 age and lifestage groups. This is largely due to incomes and wealth which tend to be higher later in life which facilitates new car purchases and demotes less less affluent younger age and lifestage groups to used car purchases.
  • The purchase incentive schemes are likely to have pulled forward orders for new cars that would have been placed anyway had the schemes not been in place, and also to have released pent up demand from orders deferred during the recession. The schemes though are targeted ay owners of cars over nine years old, a high proportion of which will be owners of used cars. The schemes therefore will have been successful at converting formerly used car owners into new car buyers.
  • The report argues that simply introducing blanket incentives for new cars, incentives such as the scrappage schemes should be targeted at specific age and lifestage groups who would like to purchase new but purchase used for reasons of affordability. This would bring new age and lifestage customers into the new car market from the used car market and a target market that would be the prime opportunity for targeted incentives would be married couples and families.
  • The consumer research on car purchase prices show that more than one third of used cars and one third of new cars are purchased in Germany, France, the UK and Spain combined for between €7,500 and €14,999. This large price-point overlap shows that there is an opportunity for the industry to convert a large number of used car buyers into becoming purchasers of new cars.
  • Car replacement cycles are lengthening in Europe, particularly in Germany and France where around 30% of households are replacing a car only every five years or more. This is mainly because of the high cost of purchase and for replacement car buyers which form the largest proportion of purchases, depreciation results in a high funding gap. The report shows that the industry needs to develop alternatives to outright purchase and purchasing using credit finance in order to shorten replacement cycles.

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Table of contents

  1. Issues in the Market

      • Main issues
        • TGI lifestage definitions
          • Abbreviations
          • Future Opportunities

              • Usage rather ownership
                • Cheaper cars?
                • Market in Brief

                  • Slower income growth and increased reliability causing longer replacement cycles
                    • Collapse in demand results in launch of incentives
                      • Consequences for demand when the incentives end
                        • Demand shifting to diesel
                          • Spain is Western Europe’s growth market
                            • Small cars are the key segment, but…
                              • … families and empty nest households are the key market
                                • An ingrained structural weakness
                                • Internal Market Environment

                                  • Key points
                                    • Cars in use – Spain has fastest rate of car parc growth
                                      • Figure 1: Passenger cars in use in Germany, France, Great Britain and Spain, 2002-07
                                      • Figure 2: Passenger cars in use in Germany, France, Great Britain and Spain, 2002-07
                                    • Age profile of cars in use
                                      • Figure 3: Passenger cars in use, by age in Germany, France, Great Britain and Spain, 2007
                                      • Figure 4: Number of passenger cars in use, by age in Germany, France, Great Britain and Spain, 2007
                                      • Figure 5: Proportion of passenger cars in use, by age in Germany, France, Great Britain and Spain, 2007
                                    • Car ownership – multiple car ownership increasing
                                      • Figure 6: Trends in car ownership in Great Britain, Germany, France and Spain, 2004-08
                                    • Car replacement cycles lengthening
                                      • Figure 7: Trends in new and replacement demand in Great Britain, Germany, France and Spain, 2006-08
                                    • Frequency of purchasing is reducing
                                      • Figure 8: Trends in frequency of purchasing in Great Britain, Germany, France and Spain, 2004-08
                                    • New and used car purchasing
                                        • Figure 9: Trends in new and used car purchasing in Great Britain, Germany, France and Spain, 2004-08
                                      • Demand shifting to diesel
                                        • Figure 10: Type of engine in most recently purchased car in Great Britain, Germany, France and Spain, 2004-08
                                      • But low take-up of alternative fuels
                                        • Differences in car purchase prices
                                            • Figure 11: Purchase cost of a car, new and used, in Great Britain, Germany, France and Spain, 2008
                                          • Price-point overlap
                                            • Figure 12: Purchase cost overlap for new and used cars, in Great Britain, Germany, France and Spain, 2008
                                          • Car taxation
                                            • Figure 13: Tax as a percentage of the net car price (based on a 2000cc capacity car), EU 15 countries, 2008
                                            • Figure 14: New registrations of cars under 120g CO2/km emissions in Western Europe, 1997-2007
                                          • Incentives and scrappage schemes
                                            • Figure 15: Car scrappage schemes in Germany, France, UK and Spain, May 2009
                                          • Impact of scrappage schemes
                                            • Figure 16: Trend in monthly car sales in Germany, France, UK and Spain, January 2008-June 2009
                                            • Figure 17: Percentage growth in monthly car sales in selected EU countries, May-June 2009
                                          • Advantages and disadvantages of scrappage schemes
                                            • What happens when the incentives end?
                                            • Broader Market Environment

                                              • Key points
                                                • UK and Spain fastest growth economies
                                                  • Figure 18: Trends in gross domestic product in Germany, France, UK and Spain, 2003-13
                                                  • Figure 19: Trend indices of gross domestic product in Germany, France, UK and Spain, 2003-13
                                                • Spain has fastest PDI growth rate
                                                  • Figure 20: Trends in personal disposable income in Germany, France, UK and Spain, 2003-13
                                                  • Figure 21: Trend indices of personal disposable income in Germany, France, UK and Spain, 2003-13
                                                • Spain also has fastest rate of spending growth
                                                  • Figure 22: Trends in consumer expenditure in Germany, France, UK and Spain, 2003-13
                                                  • Figure 23: Trend indices of consumer expenditure in Germany, France, UK and Spain, 2003-13
                                                • Modest population growth in developed markets
                                                  • Figure 24: Population trends in Germany, France, UK and Spain, 2003-13
                                                  • Figure 25: Population trends in Germany, France, UK and Spain, 2003-13
                                                • Cultural and economic differences
                                                  • Increasing homogeneity?
                                                    • Fragmentation of lifestyles
                                                      • Attitudes towards cars
                                                        • Figure 26: Attitudes towards cars in Great Britain, Germany, France and Spain, 2008
                                                      • The French most possessive…
                                                        • … for the Spanish the car is a commodity…
                                                          • … for the British a car is important for their leisure…
                                                            • … and for the Germans the car is an extension of themselves
                                                              • Figure 27: Purchase cost of a car, new and used, in Great Britain, Germany, France and Spain, 2008
                                                          • Market Size and Trends

                                                            • Key points
                                                              • Spain has been the new car growth market…
                                                                • Figure 28: Trends in new car sales in Germany, UK, France and Spain, 1998-2008
                                                                • Figure 29: Trends in new car sales in the EU 15 countries, 1990-2008
                                                              • …while demand fell in Germany, France and UK
                                                                • Germany is largest market in EU 15 countries
                                                                  • Figure 30: New car sales in EU 15 countries, 2008
                                                                  • Figure 31: New car sales per 1,000 population in EU 15, 2008
                                                                • Market forecasts
                                                                  • Figure 32: Volume of new car sales in Germany, France, UK and Spain, 2004-14
                                                                • Factors used in the forecast
                                                                  • Market segmentation
                                                                    • Small and lower medium segments are mainstay of market
                                                                      • Figure 33: Percentage of new car sales, by segment in Germany, France, UK and Spain, 2007
                                                                    • But larger models important for profitability
                                                                      • Figure 34: Trends in new car sales segments in Germany, France, UK and Spain, 2006-08
                                                                    • Small car sales relatively stable
                                                                      • Lower medium and executive segments have declined
                                                                        • Current trends show small cars taking a larger share of sales
                                                                          • Figure 35: Trends in new car sales segments in Germany, France, UK and Spain, 2007 and Jan-Apr 2009
                                                                        • Sales of diesel-fuelled cars have risen fast
                                                                          • Figure 36: Trends in sales of diesel fuelled cars in Germany, France, UK and Spain, 1998 and Jan -May 2009
                                                                        • National demand patterns still influenced by domestic manufacturers
                                                                        • The Consumer

                                                                          • Key points
                                                                            • Car ownership profiles
                                                                              • Figure 37: Profile of household car ownership, in Great Britain, Germany, France and Spain, 2008
                                                                            • Car purchase penetration – Great Britain
                                                                              • Figure 38: Penetration of new and used car purchasing (only or most recently obtained car), Great Britain, 2008
                                                                            • Car purchase penetration – Germany
                                                                              • Figure 39: Penetration of new and used car purchasing (only or most recently obtained car), Germany, 2008
                                                                            • Car purchase penetration – France
                                                                              • Figure 40: Penetration of new and used car purchasing (only or most recently obtained car), France, 2008
                                                                            • Car purchase penetration – Spain
                                                                              • Figure 41: Penetration of new and used car purchasing (only or most recently obtained car), Spain, 2008
                                                                            • New car purchase factors: Wide variation between countries
                                                                              • Figure 42: Most important new car purchase features, in Great Britain, Germany, France and Spain, 2008
                                                                            • Used car purchase factors: Price is the main criteria
                                                                              • Figure 43: Most important used car purchase features, in Great Britain, Germany, France and Spain, 2008
                                                                            • Purchase intentions
                                                                              • Figure 44: Purchase intentions in Great Britain, Germany, France and Spain in next twelve months, 2008
                                                                              • Figure 45: Purchase intentions in Great Britain, Germany, France and Spain in next twelve months, 2008
                                                                            • Conclusions
                                                                            • Appendix

                                                                                • Figure 46: Other car scrappage schemes in operation in EU, 2008/09
                                                                                • Figure 47: Profile of new and second-hand car purchasing (only car or most recently obtained household car), in Great Britain, 2008
                                                                                • Figure 48: Profile of new and second-hand car purchasing (only car or most recently obtained household car), in Germany, 2008
                                                                                • Figure 49: Profile of new and second-hand car purchasing (only car or most recently obtained household car), in France, 2008
                                                                                • Figure 50: Profile of new and second-hand car purchasing (only car or most recently obtained household car), in Spain, 2008
                                                                                • Figure 51: Most important new car purchase features, in Great Britain, Germany, France and Spain, 2008
                                                                                • Figure 52: Most important used car purchase features, in Great Britain, Germany, France and Spain, 2008

                                                                            Companies Covered

                                                                            • Automobile Association (AA)
                                                                            • Bayerische Motoren Werke AG (BMW)
                                                                            • BMW (GB) Ltd
                                                                            • British Market Research Bureau (BMRB)
                                                                            • Driver and Vehicle Licensing Agency
                                                                            • Driving Standards Agency
                                                                            • Fiat Auto
                                                                            • Ford Motor Company Limited (UK)
                                                                            • Government Actuary's Department (GAD)
                                                                            • Jaguar Cars Limited
                                                                            • MG Rover Group Limited
                                                                            • Office for National Statistics
                                                                            • Renault (UK) Ltd
                                                                            • Society of Motor Manufacturers and Traders
                                                                            • Toyota (GB) PLC
                                                                            • Vauxhall Motors Ltd
                                                                            • Volkswagen UK

                                                                            Car Ownership and Purchasing in Europe - August 2009

                                                                            US $2,478.79 (Excl.Tax)