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Car Purchasing Process - UK - April 2014

“The new car market, while on the path to recovery, is not immune from challenges. Competition from those within and outside of the market is ever present and is likely to grow if recent trends towards consumer individuality continue. Getting closer to the buyer offers clear advantages for manufacturers and retailers not only in achieving future sales but also in understanding how cars are to develop a future role in society.”

– Neil Mason, Head of Retail Research

Some questions answered in this report include:

  • Will new cars continue to face a challenge from used?
  • Is market fragmentation a reality?
  • Are dealers still seen as a safe bet for many?

Over the past 12 months the fortunes for the UK automotive sector have improved dramatically as it has shrugged off many of the difficulties that it was facing in the aftermath of the UK economy entering recession in 2008. As such, the car purchasing market is now much stronger and confident than it has been for some time with sales expected to make further positive progress during 2014.

The performance of new car sales is the most obvious illustration of the recent progress that has been made by the sector. Total private and business/fleet volumes stood up in 2013 compared with 2012 with Mintel of the belief that a further increase will follow in 2014. Within the market there is a shift away from mid-range models towards smaller and specialist makes such as MPVs and dual purpose vehicles. There is also a steady shift towards diesel over petrol with hybrids and electric vehicles as yet failing to make any significant inroads into the market.

The impact of recent changes in consumer preferences towards motor vehicles continues to cause disturbance within the supplier market. Although around a quarter of new car sales continue to come from two manufacturers, Ford and Vauxhall, the rest of the sector remains relatively fragmented. Here the effects of trading up by some and a demand for increased value for money from other buyers are boosting the fortunes of certain suppliers to the detriment of others.

Mintel’s exclusive research for this report provides additional information on buyer behaviour, presenting a detailed analysis of the purchasing intentions and preferences of adults when it comes to the purchasing of cars. It illustrates the wide range of price points that exist within the market as well as the key groups that are likely to purchase a new or a used vehicle. Our findings show the importance of certain sales channels when it comes to vehicle purchasing, again with differences for those purchasing new and used.

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 to illustrate the context of private sales within the wider market.

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Table of contents

  1. Introduction

      • Definitions
        • Abbreviations
        • Executive Summary

            • The market
              • New car sales accelerate
                • Figure 1: UK new car sales, 2008-18
              • Small and specialist
                • Figure 2: Share of vehicle types amongst private purchasers, 2010-13
              • Strong level of future purchasing intent
                • Figure 3: Future purchasing intentions in the next 3 years, February 2014
              • Costs of ownership and competition from other transport options cannot be overlooked
                • Figure 4: Used car market volume, 2008-13
              • Companies, brands and innovation
                • Manufacturer market share in flux
                  • Dealers dominate for car sales
                    • The consumer
                      • Over half of cars in ownership purchased more than two years ago
                        • Figure 5: Statements about car ownership, February 2014
                      • £15,000 is the upper ceiling band for most purchases
                        • Figure 6: Amount paid for last car, February 2014
                      • Majority of purchases are from dealers
                        • Figure 7: Where last car was purchased, February 2014
                      • Strong future purchasing intentions
                        • Figure 8: Intention on purchasing a car/s in the next 3 years, February 2014
                      • Price and reliability lead as key factors when purchasing
                        • Figure 9: Primary importance of five key factors when purchasing a car, February 2014
                      • Searching is an important part of the purchasing process
                        • Figure 10: Agreement with statements related to buying a car, February 2014
                      • What we think
                      • Issues and Insights

                          • New cars will continue to face a challenge from used
                            • The facts
                              • The implications
                                • Market fragmentation is a reality
                                  • The facts
                                    • The implications
                                      • Dealers remain a safe bet for many
                                        • The facts
                                          • The implications
                                          • Trend Application

                                              • Trend: Minimise Me
                                                • Trend: The Nouveau Poor
                                                  • Trend: Green and Lean
                                                  • Market Environment

                                                    • Key points
                                                      • UK economy and consumers both show signs of recovery...
                                                        • Figure 11: GDP, PDI, consumer expenditure and savings, at current prices, 2008-18
                                                      • GDP growth will take time to strengthen
                                                        • Consumer expenditure set to expand faster
                                                          • ... with quarterly GDP performance further illustrating this
                                                            • Figure 12: GDP quarterly percentage change, Q1 2006-Q32013
                                                          • Financial confidence begins to strengthen
                                                            • Figure 13: Household financial situation index, February 2009-November 2013
                                                          • Net lending for car purchases sees strong growth
                                                            • Figure 14: Value of advances (£m) on sales of all cars bought on finance by consumers through dealerships, 2009-13
                                                          • Majority of adults own a car...
                                                            • Figure 15: Ownership of cars February 2014
                                                          • ... although older cars dominate the market
                                                            • Figure 16: Ownership of cars, by when purchased, February 2014
                                                          • Over half of adults are likely to purchase a car in the next 3 years
                                                            • Figure 17: Future purchasing intentions in the next 3 years, February 2014
                                                          • Near equal interest in new and used cars
                                                            • Figure 18: Type of car expected to be purchased, February 2014
                                                          • Falling price of used cars remains a concern for new car market
                                                            • Figure 19: Price indices of new and used cars, 1996-2012
                                                          • Pain of high fuel prices may be easing
                                                            • Figure 20: Monthly UK petrol, diesel and oil price trends, 2009-13**
                                                          • Growth in the number of households set to boost demand for personal transport
                                                            • UK population moving socially downward
                                                              • An ageing population
                                                              • Competitive Context

                                                                • Key points
                                                                  • Car ownership costs keep rising
                                                                    • Figure 21: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2009-12
                                                                  • Competing demands when it comes to overall expenditure
                                                                    • Figure 22: Consumer expenditure, by sector (£billion), 2012
                                                                  • Used car sales outperform new car sales
                                                                    • Figure 23: Used car market volume, 2008-13
                                                                  • Alternatives to car ownership represent an emerging threat
                                                                  • Who’s Innovating?

                                                                    • Key points
                                                                      • Showroom innovation
                                                                        • Online car and service store
                                                                          • Engaging the youth in the electric movement
                                                                            • VW taps into geo-location
                                                                            • Strengths and Weaknesses in the Market

                                                                              • Strengths
                                                                                • Weaknesses
                                                                                • Market Size and Forecast

                                                                                  • Key points
                                                                                    • New car sales return to pre-recessionary levels
                                                                                      • Figure 24: UK new registrations of motor vehicles, 2008-14
                                                                                    • Private sales show upward surge
                                                                                      • Business and fleet sales record less variability
                                                                                        • Forecast
                                                                                          • Figure 25: UK new car sales, 2008-18
                                                                                      • Segment Performance

                                                                                        • Key points
                                                                                          • Small and dual purpose vehicles register strongest growth
                                                                                            • Figure 26: Sales of cars* by type, mini and medium size cars, 2008-13
                                                                                            • Figure 27: Sales of cars* by type, other cars, 2008-13
                                                                                          • Buyers think small…
                                                                                            • New vehicle designs proving especially popular
                                                                                              • … as larger models suffer
                                                                                                • Trading up benefits executive sector
                                                                                                  • Smaller cars prove especially popular with private motorists
                                                                                                    • Figure 28: Sales of new vehicles, % share by purchaser type, 2013
                                                                                                  • Half of all private buyers opt for vehicles in mini or supermini category
                                                                                                    • Fleet and business buyers record a much broader interest
                                                                                                      • Private market showing polarisation
                                                                                                        • Figure 29: Share of vehicle types amongst private purchasers, 2010-13
                                                                                                      • Shift down in terms of size
                                                                                                        • Growth in demand for dual and multipurpose vehicles
                                                                                                          • Diesels leads over petrol and AFVs
                                                                                                            • Figure 30: Sales of cars* by fuel, 2008-13
                                                                                                          • Diesels continue to hold around a half of all sales
                                                                                                            • Petrol sector shows small recovery
                                                                                                              • AFVs fail to make progress
                                                                                                                • Petrol/electric hybrids dominate AFV market
                                                                                                                  • Figure 31: Electric, hybrid and AFV sales*, 2010 -13
                                                                                                              • Market Share

                                                                                                                • Key points
                                                                                                                  • Fragmentation of market continues as established manufacturers face new challenges
                                                                                                                    • Figure 32: Manufacturer shares of new car registrations, 2010-13
                                                                                                                  • Ford and Vauxhall experience different fortunes
                                                                                                                    • Premium German marques make big strides...
                                                                                                                      • ... as some mass market manufacturers suffer
                                                                                                                        • Value brands making good progress
                                                                                                                        • Brand Communication and Promotion

                                                                                                                          • Key point
                                                                                                                            • Promotional expenditure largely unchanged
                                                                                                                              • Figure 33: Topline advertising spend in the car market, 2010-13
                                                                                                                            • Established names in the market up their investment
                                                                                                                              • Figure 34: Top 20 car manufacturers, by advertising expenditure, 2010-13
                                                                                                                            • Manufacturer expenditure by individual ranges
                                                                                                                              • Figure 35: Top manufacturer model lines , by advertising expenditure, 2013
                                                                                                                            • Television has increased its profile
                                                                                                                              • Figure 36: Share of manufacturers advertising expenditure, by channel, 2010-13
                                                                                                                            • Investment by dealers is largely fragmented
                                                                                                                              • Figure 37: Top 20 Car dealerships, by advertising expenditure, 2010-13
                                                                                                                            • Radio dominates for dealers with direct mail also important
                                                                                                                              • Figure 38: Share of dealer advertising expenditure, by channel, 2010-13
                                                                                                                          • Brand Research

                                                                                                                            • Brand map
                                                                                                                                • Figure 39: Attitudes towards and usage of brands in the car sector, February 2014
                                                                                                                              • Correspondence analysis
                                                                                                                                • Brand attitudes
                                                                                                                                  • Figure 40: Attitudes, by car brand, February 2014
                                                                                                                                • Brand personality
                                                                                                                                  • Figure 41: Car brand personality – macro image, February 2014
                                                                                                                                  • Figure 42: Car brand personality – micro image, February 2014
                                                                                                                                • Brand experience
                                                                                                                                  • Figure 43: Car brand usage, February 2014
                                                                                                                                  • Figure 44: Satisfaction with various car brands, February 2014
                                                                                                                                  • Figure 45: Consideration of car brands, February 2014
                                                                                                                                  • Figure 46: Consumer perceptions of current car brand performance, February 2014
                                                                                                                                • Brand recommendation
                                                                                                                                  • Figure 47: Recommendation of various car brands, February 2014
                                                                                                                              • Channels to Market

                                                                                                                                • Key points
                                                                                                                                  • Franchised dealer network stabilises after recent falls
                                                                                                                                    • Figure 48: Number of UK franchised dealer outlets, 2000-13
                                                                                                                                  • Multi-site operators dominate the market
                                                                                                                                    • Figure 49: Top ten main dealership groups in the UK, by turnover, 2013
                                                                                                                                  • Independent market represents a more fragmented sector
                                                                                                                                    • Figure 50: Top ten independent dealership groups in the UK, by turnover and unit sales, 2013
                                                                                                                                  • The internet remains a minor tool for purchasing...
                                                                                                                                    • ... with greater importance attached to its use in search
                                                                                                                                    • The Consumer – Car Ownership

                                                                                                                                      • Key points
                                                                                                                                        • Majority of cars owned were purchased more than 2 years ago
                                                                                                                                          • Figure 51: Statements about car ownership, February 2014
                                                                                                                                        • Young adults most likely to own a used car
                                                                                                                                          • Income and socio-economic status have strong impact on type of car owned
                                                                                                                                            • Londoners most likely to own a new car
                                                                                                                                              • Those without access to a car are also likely not to hold a driving licence
                                                                                                                                                • Figure 52: Statements about car ownership, February 2014
                                                                                                                                            • The Consumer – Amount Paid For Last Car

                                                                                                                                              • Key points
                                                                                                                                                • Buyers can be found at all price points
                                                                                                                                                  • Figure 53: Amount paid for last car, February2014
                                                                                                                                                • Majority of purchasers spend up to £15,000 on a car
                                                                                                                                                  • Income plays a big part in the amount spent…
                                                                                                                                                    • … as does socio-economic status
                                                                                                                                                      • Men and older adults are also likely to spend more
                                                                                                                                                        • Economic slowdown may have impacted on price paid for used cars
                                                                                                                                                          • Figure 54: Price paid for last car purchased, by statements about car ownership and driving, February 2014
                                                                                                                                                        • Shift towards lower price used cars is evident…
                                                                                                                                                          • … yet this does not appear the case for those buying new
                                                                                                                                                          • The Consumer – Where Was Your Last Car Purchased?

                                                                                                                                                            • Key points
                                                                                                                                                              • Traditional retail channels are most important when buying a car
                                                                                                                                                                • Figure 55: Where last car was purchased, February 2014
                                                                                                                                                              • Around three quarters of sales through dealers
                                                                                                                                                                • Private sellers lead over other channels
                                                                                                                                                                  • Different age groups have different preferences…
                                                                                                                                                                    • … with this possibly related to finance
                                                                                                                                                                      • Urbanites have greater choice for purchasing
                                                                                                                                                                        • Large families look for something different
                                                                                                                                                                          • Main dealers dominate market with independent dealers a strong second
                                                                                                                                                                            • Figure 56: Where last car was purchased, March 2012, March 2013 and February 2014
                                                                                                                                                                          • Dealers dominate when it comes to spending more on a car
                                                                                                                                                                            • Figure 57: Where was your last car purchased, by price paid for last car purchased, February 2014
                                                                                                                                                                          • Over half of those spending £7,500 or more buy from a main dealer
                                                                                                                                                                            • Other outlets tend to deal with cheaper cars
                                                                                                                                                                              • Dealers stake out new market, independents and private sellers the used market
                                                                                                                                                                                • Figure 58: Where was your last car purchased, by statements about car ownership, February 2014
                                                                                                                                                                            • The Consumer – Timescale for Future Car Purchasing

                                                                                                                                                                              • Key points
                                                                                                                                                                                • Over half of all adults plan to purchase a car within three years
                                                                                                                                                                                  • Figure 59: Intention on purchasing a car/s in the next 3 years, February 2014
                                                                                                                                                                                • Certain groups should be viewed as important prospects
                                                                                                                                                                                  • Half of all purchasers buying in the next three years plan to buy soon
                                                                                                                                                                                    • Figure 60: Timeframe for future car purchase, February 2014
                                                                                                                                                                                  • Younger adults appear interested in buying sooner
                                                                                                                                                                                    • Urban buyers most eager to purchase
                                                                                                                                                                                      • Income, not surprisingly, also has an influence on purchase timeframe
                                                                                                                                                                                        • New and used cars record equal preference
                                                                                                                                                                                          • Figure 61: New or second hand purchase, February 2014
                                                                                                                                                                                        • Age appears to play an important part in the purchase decision
                                                                                                                                                                                          • Groups planning to buy new are also those most likely to purchase in the next three years
                                                                                                                                                                                            • New cars set to feel the benefit of short-term purchasing plans
                                                                                                                                                                                              • Figure 62: New or second hand purchase, by timeframe for future car purchase, February 2014
                                                                                                                                                                                          • The Consumer – Factors Important When Purchasing

                                                                                                                                                                                            • Key points
                                                                                                                                                                                              • Price is key when purchasing
                                                                                                                                                                                                • Figure 63: Importance of factors when purchasing a car, February 2014
                                                                                                                                                                                              • … although reliability registers broader importance overall
                                                                                                                                                                                                • Different groups prioritise different factors
                                                                                                                                                                                                  • Factors associated with car use are also important
                                                                                                                                                                                                    • Figure 64: Importance of other factors when purchasing a car, February 2014
                                                                                                                                                                                                  • Men and women looking for different things
                                                                                                                                                                                                    • Older adults are typically more demanding
                                                                                                                                                                                                      • Higher earners focus on comfort, design and quality
                                                                                                                                                                                                      • The Consumer – Statements Associated with Car Purchasing

                                                                                                                                                                                                        • Key points
                                                                                                                                                                                                          • Searching is an important part of the purchase process
                                                                                                                                                                                                            • Figure 65: Agreement with statements related to buying a car, February 2014
                                                                                                                                                                                                          • Shopping around is especially important
                                                                                                                                                                                                            • Flexibility and support is sought when purchasing
                                                                                                                                                                                                              • The internet remains a niche channel
                                                                                                                                                                                                                • Hybrids are favoured over electric vehicles
                                                                                                                                                                                                                  • Older adults seek out particular factors when it comes to purchasing
                                                                                                                                                                                                                    • Rural purchasers are more opinionated
                                                                                                                                                                                                                      • Londoners – only interested in specific factors
                                                                                                                                                                                                                        • Attitudes towards purchasing vary between those buying new and used
                                                                                                                                                                                                                          • Figure 66: Attitudes towards car purchasing, by new or second hand purchase, February 2014
                                                                                                                                                                                                                      • Appendix – Market Environment

                                                                                                                                                                                                                          • Figure 67: Ownership of a car, by demographics, February 2014
                                                                                                                                                                                                                          • Figure 68: UK households, by size, 2008-18
                                                                                                                                                                                                                          • Figure 69: Forecast adult population trends, by socio-economic group, 2008-18
                                                                                                                                                                                                                          • Figure 70: Trends in the age structure of the UK population, 2008-18
                                                                                                                                                                                                                          • Figure 71: Trends in the age structure of the UK population, 2008-18
                                                                                                                                                                                                                      • Appendix – Brand Research

                                                                                                                                                                                                                          • Figure 72: Brand usage, February 2014
                                                                                                                                                                                                                          • Figure 73: Brand commitment, February 2014
                                                                                                                                                                                                                          • Figure 74: Brand momentum, February 2014
                                                                                                                                                                                                                          • Figure 75: Brand diversity, February 2014
                                                                                                                                                                                                                          • Figure 76: Brand satisfaction, February 2014
                                                                                                                                                                                                                          • Figure 77: Brand recommendation, February 2014
                                                                                                                                                                                                                          • Figure 78: Brand attitude, February 2014
                                                                                                                                                                                                                          • Figure 79: Brand image – macro image, February 2014
                                                                                                                                                                                                                          • Figure 80: Brand image – micro image, February 2014
                                                                                                                                                                                                                      • Appendix – The Consumer – Car Ownership

                                                                                                                                                                                                                          • Figure 81: Statements about car ownership and driving, by demographics, February 2014
                                                                                                                                                                                                                          • Figure 82: Reasons for not owning a car, by demographics, February 2014
                                                                                                                                                                                                                      • Appendix – The Consumer – Amount Paid For Last Car

                                                                                                                                                                                                                          • Figure 83: Most popular price paid for last car purchased, by demographics, February 2014
                                                                                                                                                                                                                          • Figure 84: Next most popular price paid for last car purchased, by demographics, February 2014
                                                                                                                                                                                                                      • Appendix – The Consumer – Where Was Your Last Car Purchased?

                                                                                                                                                                                                                          • Figure 85: Most popular where was your last car purchased, by demographics, February 2014
                                                                                                                                                                                                                      • Appendix – The Consumer – Timescale for Future Car Purchasing

                                                                                                                                                                                                                          • Figure 86: Intention on purchasing a car/s in the next 3 years, by demographics, February 2014
                                                                                                                                                                                                                          • Figure 87: New or second hand purchase, by demographics, February 2014
                                                                                                                                                                                                                          • Figure 88: Timeframe for future car purchase, by demographics, February 2014
                                                                                                                                                                                                                      • Appendix – The Consumer – Factors Important When Purchasing

                                                                                                                                                                                                                          • Figure 89: Importance of factors when purchasing a car – Price, by demographics, February 2014
                                                                                                                                                                                                                          • Figure 90: Importance of factors when purchasing a car – Reliability, by demographics, February 2014
                                                                                                                                                                                                                          • Figure 91: Importance of factors when purchasing a car – Low fuel consumption, by demographics, February 2014
                                                                                                                                                                                                                          • Figure 92: Importance of factors when purchasing a car – Safety, by demographics, February 2014
                                                                                                                                                                                                                          • Figure 93: Importance of factors when purchasing a car – Brand, by demographics, February 2014
                                                                                                                                                                                                                          • Figure 94: Most popular importance of other factors when purchasing a car, by demographics, February 2014
                                                                                                                                                                                                                          • Figure 95: Next most popular importance of other factors when purchasing a car, by demographics, February 2014
                                                                                                                                                                                                                      • Appendix – The Consumer – Statements Associated with Car Purchasing

                                                                                                                                                                                                                          • Figure 96: Most popular attitudes towards car purchasing, by demographics, February 2014
                                                                                                                                                                                                                          • Figure 97: Next most popular attitudes towards car purchasing, by demographics, February 2014
                                                                                                                                                                                                                          • Figure 98: Other attitudes towards car purchasing, by demographics, February 2014

                                                                                                                                                                                                                      Companies Covered

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                                                                                                                                                                                                                      Car Purchasing Process - UK - April 2014

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