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Car Purchasing Process - UK - April 2015

"The new car market is currently experiencing one of its most buoyant periods in recent times with sales reaching a new high in 2014. Yet despite such bravado the market is passing through a period of intense change which is forcing manufacturers and sellers to continually keep abreast of consumer demands."

– Neil Mason, Head of Retail Research

This report looks at the following issues:

  • New car sales enter uncharted territory
  • Dual and multi purpose vehicles carve out market in own right
  • Role of the internet in purchasing could be revitalised

The UK car market is currently benefiting from a period of sustained growth. Improvements in the UK economy following the 2008/09 recession have seen new car purchases reach 2.48 million units in 2014. Within the sector there is continuing evidence of fragmentation with smaller cars and Sports Utility Vehicles (SUVs) as well as trading up to executive models all proving popular with buyers.

Car manufacturers have gone through an especially challenging period of late with many established names in the market facing competition. Manufacturers with a strong premium range appear to be benefiting at the expense of others as do a number of new entrants which are offering greater value to the buyer.

Mintel’s research for this report provides a wealth of valuable additional information on the behaviour of car owners and buyers. It highlights that just under two thirds own a car and that used cars make up 56% of cars purchased. The importance of dealers to buyers is evident with around half of purchases from a main dealer although the profile of online is notable for pre-purchase activity such as searching for a car. Just under half of adults are noted by Mintel as planning to purchase any type of car, new or used, in the coming three years with a sizeable number of purchases expected to take place during this period.

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 purchases pass pre-recessionary peak
                • Figure 1: UK new car sales, 2009-19
              • Market development boosted by a number of drivers
                • Smaller cars dominate sales
                  • Figure 2: Share of main vehicle segments, 2009-15
                • New car purchases face competition from used and other ownership models
                  • Figure 3: Car market volumes, 2009-15
                • Companies, brands and innovation
                  • Fragmentation typifies current state of the market
                    • Dealer network benefiting from relative stability
                      • The consumer
                        • Over half of cars in ownership purchased more than two years ago
                          • Figure 4: Statements about those owning a car, January 2015
                        • Dealers dominate the market
                          • Figure 5: Where last car was purchased, January 2015
                        • Support is important for many buyers
                          • Figure 6: Agreement with statements related to buying a car, January 2015
                        • Future purchase intentions suggest continued strong sales
                          • Figure 7: Intention on purchasing a car/s in the next three years, January 2015
                          • Figure 8: New or second hand purchase, January 2015
                        • Decision making often involves others in a household
                          • Figure 9: Involvement in the decision making process when purchasing a car, January 2015
                        • What we think
                        • Issues and Insights

                            • New car sales enter uncharted territory
                              • The facts
                                • The implications
                                  • Dual and multi purpose vehicles carve out market in own right
                                    • The facts
                                      • The implications
                                        • Role of the internet in purchasing could be revitalised
                                          • The facts
                                            • The implications
                                            • Trend Application

                                                • Unfairer sex
                                                  • Experience is all
                                                    • Generation Next
                                                    • Market Environment

                                                      • Key points
                                                        • UK economy in recovery
                                                          • Figure 10: GDP, PDI, consumer expenditure and savings, at current prices, 2009-19
                                                        • GDP growth is beginning to strengthen
                                                          • Consumer expenditure likely to be buoyant
                                                            • Financial confidence begins to strengthen
                                                              • Figure 11: Financial confidence index, 2009-15
                                                            • Net lending for car purchases doubles in five years...
                                                              • Figure 12: Value of advances (£m) on sales of all cars bought on finance by consumers through dealerships, 2010-14
                                                            • …as the cost of finance tumbles
                                                              • Figure 13: Monthly percentage values of selected interest rates. January 2009-January 2014
                                                            • Just under two thirds of adults own a car
                                                              • Older cars are more important within the market…
                                                                • Figure 14: Ownership of cars, by when purchased, February 2014
                                                              • ...with recent evidence hinting at growth in the percentage owning the very oldest cars
                                                                • Figure 15: Age structure of the car parc in years, 2012 and 2013
                                                              • Nearly half of adults are likely to purchase a car in the next three years
                                                                • Figure 16: Future purchasing intentions in the next 3 years, January 2015
                                                              • Used cars record higher popularity than new
                                                                • Figure 17: New or second hand purchase, January 2015
                                                              • Used car prices on the fall
                                                                • Figure 18: Price indices of new and used cars, 2003-14
                                                              • Falling fuel prices further ease ownership costs
                                                                • Figure 19: Typical retail prices of petroleum products in the UK, Jan 2012-Jan 2015
                                                              • Shift in population towards the less affluent
                                                                • UK population is beginning to age
                                                                  • One-person households are in the ascendency...
                                                                    • Figure 20: Changes in single and multi-person households, 2005-14
                                                                • Competitive Context

                                                                  • Key points
                                                                    • Car ownership costs increase less in recent years
                                                                      • Figure 21: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2009-13
                                                                    • Transport is one of many demands on consumer expenditure
                                                                      • Figure 22: Consumer expenditure, by sector (£bn), 2014
                                                                    • Used car sales outperform new car sales
                                                                      • Figure 23: New and used car market volumes, 2009-15
                                                                    • Alternatives to car ownership represent an emerging threat
                                                                      • Figure 24: Number of rentals, number of hire days and average spend per rental, 2008-13
                                                                      • Figure 25: Car club vehicle and member growth, June 2008-November 2014
                                                                  • Who’s Innovating?

                                                                    • Key points
                                                                      • Simplifying the purchase process
                                                                        • Enhancing the purchase experience
                                                                          • Internet developments
                                                                          • Strengths and Weaknesses in the Market

                                                                            • Strengths
                                                                              • Weaknesses
                                                                              • Market Size and Forecast

                                                                                • Key points
                                                                                  • New sales increasing in both private and business & fleet sectors
                                                                                    • Figure 26: UK new registrations of motor vehicles, 2009-15
                                                                                  • Business sales dominate the market
                                                                                    • Private sales have the strongest recent growth
                                                                                      • The future
                                                                                        • Figure 27: UK new car registrations, 2009-19
                                                                                      • Forecast
                                                                                        • Figure 28: UK new car sales, 2009-19
                                                                                    • Segment Performance

                                                                                      • Key points
                                                                                        • Dual purpose and multi purpose vehicles are in the ascendency
                                                                                          • Figure 29: New car registrations by broad segment, 2009-15
                                                                                        • Dual and multi purpose vehicles see strong growth
                                                                                          • Other segments see more modest expansion
                                                                                            • Buyers opt for the smallest models
                                                                                              • Figure 30: Sales of cars* by type, mini and supermini segment, 2009-15
                                                                                            • Shift to smaller cars also evident in medium segment
                                                                                              • Figure 31: Sales of cars* by type, lower medium and upper medium segment, 2009-15
                                                                                            • Strong growth for dual and multi purpose segments of the market
                                                                                              • Figure 32: Sales of cars* by type, dual purpose and multi purpose segment, 2009-15
                                                                                            • Trading up evident from performance of executive and luxury categories
                                                                                              • Figure 33: Sales of cars* by type, dual purpose and multi purpose segment, 2009-15
                                                                                            • Private market records shift towards new vehicle formats
                                                                                              • Figure 34: Share of vehicle types amongst private purchasers, 2010-13
                                                                                          • Market Share

                                                                                            • Key points
                                                                                              • Established brands face increased competition
                                                                                                • Figure 35: Manufacturer shares of new car registrations, 2010-14
                                                                                              • Established brands are suffering a decline in market share
                                                                                                • German brands are proving popular...
                                                                                                  • ...as are smaller traditional brands and new entrants
                                                                                                    • Many Japanese brands are falling out of favour
                                                                                                      • Ford Fiesta leads the market
                                                                                                        • Figure 36: Top 10 car models, 2014
                                                                                                    • Brand Communication and Promotion

                                                                                                      • Key points
                                                                                                        • Advertising expenditure on the decline
                                                                                                          • Figure 37: Main media advertising expenditure on cars, 2011-14
                                                                                                        • Volkswagen tops the advertising spend
                                                                                                          • Figure 38: Main media advertising expenditure on cars, by advertiser, 2011-14
                                                                                                        • Television is the preferred medium
                                                                                                          • Figure 39: Main media advertising expenditure on cars, by media type, 2011-14
                                                                                                        • Growth in spend by car dealers
                                                                                                          • Figure 40: Main media advertising expenditure by car dealerships, 2011-14
                                                                                                        • Car dealers favour radio
                                                                                                          • Figure 41: Main media advertising expenditure by car dealerships. by media type, 2011-14
                                                                                                      • Channels to Market

                                                                                                        • Key points
                                                                                                          • Dealers dominate
                                                                                                            • Franchised dealer network stabilises after recent falls
                                                                                                              • Figure 42: Number of UK franchised dealer outlets, 2000-15
                                                                                                            • Mixed fortunes for manufacturers
                                                                                                              • Figure 43: Top 10 dealers by brand, 2009-15
                                                                                                            • Established names dominate
                                                                                                              • Figure 44: Top ten main dealership groups in the UK, by turnover, 2014
                                                                                                            • Independent market is more fragmented
                                                                                                              • Figure 45: Top ten independent dealership groups in the UK, by turnover and unit sales, 2014
                                                                                                            • The internet remains a niche channel
                                                                                                            • The Consumer – Car Ownership

                                                                                                              • Key points
                                                                                                                • Just under two thirds own a car
                                                                                                                  • Figure 46: Car ownership, January 2015
                                                                                                                • Used cars dominate the market
                                                                                                                  • Figure 47: Statements about car ownership, January 2015
                                                                                                                • Wealthy are more likely to have purchased a car recently
                                                                                                                  • Youngest adults are most likely to own a car from new
                                                                                                                    • Oldest adults most likely to have a purchased a car more than two years ago
                                                                                                                      • Presence of older children dents likelihood of a recent car purchase
                                                                                                                        • Rural residents are less likely to have purchased a car from new
                                                                                                                          • A third of those without a car have access to another in their household
                                                                                                                              • Figure 48: Statements about car use by those not owning a car, January 2015
                                                                                                                          • The Consumer – Where Was Your Last Car Purchased?

                                                                                                                            • Key points
                                                                                                                              • Traditional retail channels are most important when buying a car
                                                                                                                                  • Figure 49: Where last car was purchased, January 2015
                                                                                                                                • Dealers dominate as the main purchasing channels
                                                                                                                                  • Private sellers are also important
                                                                                                                                    • Age impacts where car purchased…
                                                                                                                                      • …as does the gender of the buyer
                                                                                                                                        • Wealth plays a major part in where to buy
                                                                                                                                          • Urbanites are happy to buy private
                                                                                                                                            • Recent years show subtle changes in preferences towards some channels
                                                                                                                                              • Figure 50: Where last car was purchased, 2012-15
                                                                                                                                            • Main dealers, independent and private sellers have specific strengths
                                                                                                                                              • Figure 51: Where last car was purchased, by statements about car ownership, January 2015
                                                                                                                                          • The Consumer – Statements Associated with Car Purchasing

                                                                                                                                            • Key points
                                                                                                                                              • Searching is an important part of the purchase process
                                                                                                                                                  • Figure 52: Agreement with statements related to buying a car, January 2015
                                                                                                                                                • Internet is helping many potential buyers
                                                                                                                                                  • Dealers are important for many
                                                                                                                                                    • Car owner views on the purchasing process vary
                                                                                                                                                      • Choice is not a problem
                                                                                                                                                        • Women are more likely to be concerned about car purchasing
                                                                                                                                                          • Young car owners represent a complex market
                                                                                                                                                            • Most affluent car owners want it all
                                                                                                                                                              • Londoners exhibit slightly different preferences
                                                                                                                                                                • Four distinct owner groups evident
                                                                                                                                                                  • Figure 53: Statements about car purchasing, by statements about car ownership, January 2015
                                                                                                                                                                • Buyers using the services of main dealers are the least stressed
                                                                                                                                                                  • Figure 54: Statements about car purchasing, by statements about car ownership, January 2015
                                                                                                                                                              • The Consumer – Timescale for Future Car Purchasing

                                                                                                                                                                • Key points
                                                                                                                                                                  • Over half of all adults plan to purchase a car within three years
                                                                                                                                                                      • Figure 55: Intention on purchasing a car/s in the next three years, January 2015
                                                                                                                                                                    • Age plays an important part in future purchase intentions…
                                                                                                                                                                      • …as does income
                                                                                                                                                                        • Men are more likely to purchase than women
                                                                                                                                                                          • Presence of young children seems important
                                                                                                                                                                            • Future intentions not as hopeful as they were 12 months ago
                                                                                                                                                                              • Figure 56: Intention on purchasing a car/s in the next three years, February 2014 and January 2015
                                                                                                                                                                            • Owners of new cars hold the best potential for future sales
                                                                                                                                                                              • Figure 57: Intentions to purchase a car, by statements about car ownership, January 2015
                                                                                                                                                                            • A fifth plan to purchase a car in the coming six months
                                                                                                                                                                                • Figure 58: Timeframe for future car purchase, January 2015
                                                                                                                                                                              • Income plays a major part in timing of purchase
                                                                                                                                                                                • Immediate sales are likely to come from urban buyers
                                                                                                                                                                                  • Slowdown in market suggested when comparing 2015 with 2014 purchase intentions
                                                                                                                                                                                    • Figure 59: Intention on purchasing a car/s in the next three years, February 2014 and January 2015
                                                                                                                                                                                  • Interest in used cars is slightly higher
                                                                                                                                                                                      • Figure 60: Intention on purchasing a car/s in the next three years, by new or second hand purchase, January 2015
                                                                                                                                                                                    • New car buyers
                                                                                                                                                                                      • Used car buyers
                                                                                                                                                                                        • New cars are more likely to be purchased
                                                                                                                                                                                          • Figure 61: New or second hand purchase, by purchase intention, January 2015
                                                                                                                                                                                        • New cars dominate short-term purchasing plans
                                                                                                                                                                                          • Figure 62: New or second hand purchase, by detailed purchase intention, January 2015
                                                                                                                                                                                      • The Consumer – The Decision Making Process

                                                                                                                                                                                        • Key points
                                                                                                                                                                                          • Purchasing a car is likely to involve others
                                                                                                                                                                                              • Figure 63: Involvement in the decision making process when purchasing a car, January 2015
                                                                                                                                                                                            • Men are myopic in their decision making
                                                                                                                                                                                              • Older adults are more likely to involve others…
                                                                                                                                                                                                • …with wealthiest favouring the involvement of their partners
                                                                                                                                                                                                  • Owners of older cars more likely to involve others in decision making
                                                                                                                                                                                                    • Figure 64: Involvement in decision making, by statements about car ownership, January 2015
                                                                                                                                                                                                  • Single individual is most likely to be involved in two thirds of purchases
                                                                                                                                                                                                    • Figure 65: Repertoire of key actors in car purchasing process, January 2015

                                                                                                                                                                                                Companies Covered

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

                                                                                                                                                                                                Car Purchasing Process - UK - April 2015

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