Car Purchasing Process - UK - April 2013
“New car sales have failed to fully recover from their recent slump and there is need for more proactive action by manufacturers to boost sales. Progress has already by made in stimulating interest although to push sales on from current levels, both manufacturers and dealers need to do more to understand the real needs of buyers.”
- Neil Mason, Head of Retail Research
Some questions answered in this report include:
- Where next for new car sales?
- What is the potential for hybrids and EVs?
- What is the formula for capturing customers?
Despite the continuing sluggish performance of the UK economy there is good evidence that buyers are beginning to return to the new car market. Total new registrations were up around 100,000 to 2.04 million in 2012 with a 7.4% uplift in Q1 2013 compared with Q1 2012.Although recent purchase trends suggest that buyers are waiting longer between replacing their vehicle there is some evidence that short-term plans for car purchases in the coming 12 months are set to strengthen. As such, Mintel views the fortunes for the UK market as one of slow recovery with buyers set to increase their demands on manufacturers and retailers.
Examination of the types of cars now being purchased illustrates the growing demands being placed on the market. Long gone are the days that standard medium and large sized vehicles were acceptable. Many car buyers are now looking for more individual models be they exuding elements of quality and image, offering enhanced value or simply something different in terms of design than those available previously.
Mintel’s research provides a detailed profile of the UK car buyer. It shows the importance of used cars over new cars, with four out of ten car owners in possession of a second hand car compared to 27% who purchased their last car from new. Price is paramount to main car buyers to the extent that two-thirds of cars owned currently have been bought for less than £10,000. However, when looking at specific factors at the stage of buying, while price is overall the most important, other features such as reliability, low fuel consumption and safety also come into play.
Looking ahead, both manufacturers and retailers appear aware of the fact that buyers, at least for new vehicles, are both demanding more and at the same time are in a much stronger position when handing over their money. With many buyers happy to shop around for a deal, and the internet having a growing role in the search process, attracting a purchaser has become a more exacting task. Understanding the UK car buyer would appear critical for success in what remains a difficult market for manufacturers and retailers.
This report investigates the car-buying process and the retailing of cars to private individuals. It focuses on new car sales but also presents these in the context of the used car market. It is exclusively focused on passenger vehicles, and therefore excludes any discussion of the market for light commercial vehicles or fleet vehicles.
The report specifically excludes sales to businesses or operators of company car fleets although data for sales to all three markets are included where necessary.
The buying and selling of cars can take place through a number of distribution channels:
- Franchised new car dealers—those under contract to specific car manufacturers
- Multi-franchise new car dealers—those with contracts that enable them to sell the products of more than one manufacturer
- Independents—dealers that sell used vehicles from various manufacturers, some of which specialise in nearly-new or pre-registered cars
- Car supermarkets—large, out-of-town retail sites selling a wide variety of new, nearly-new, pre-registered and imported cars, usually in a no-haggle flat commission sales environment
- Used-casual sales—used cars sold through private parties.
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