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Car Purchasing Process - UK - April 2017

“Car sales reached an all-time high in 2016. While this is good news for those involved in this sector, and a reflection of the efforts to stimulate new car sales in recent years, there are many reasons to be concerned about the next few years. Numerous factors appear set to impact on demand resulting in evermore creative approaches being required in order to continue to encourage purchasing.”
– Neil Mason, Head of Retail Research

This Report discusses the following key topics:

  • Have car sales reached a peak?
  • Diesel sales appear to be in reverse
  • Recent investment in online sales may finally signal growth for this channel

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Table of contents

  1. Overview

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

          • The market
            • Car purchases surpass 10.5 million units in 2016
              • Figure 1: UK new and used car sales, by volume, 2011-21
            • Used car sales dominate the market
              • Figure 2: New and used car market volumes, 2011-16
            • Recent popularity of diesel appears to have peaked
              • Figure 3: Sales of cars, by fuel type, 2011-16
            • Dealers are growing their share of the overall market…
              • Figure 4: Change in share of new and used car volumes, by channel, 2013-16
            • Companies and brands
              • Mixed fortunes for car manufacturers
                • Manufacturers and distributors invest in online as a sales channel
                  • Advertising expenditure expands
                    • The consumer
                      • Car owners are in the majority
                        • Nearly half of all cars were purchased in the last two years
                          • More than half of adults plan to buy a car in the next three years
                            • Figure 5: Intention to purchase a car in the next 3 years, February 2017
                          • Less than half of those planning to purchase expect to do so in the coming 12 months
                            • Figure 6: Strongest intentions to purchase a car in the next 3 years, February 2017
                          • New cars are preferred over used
                            • Figure 7: Likelihood of new or used purchase, February 2017
                          • Savings and part exchange are the most popular methods of paying for a car
                            • Figure 8: Methods of payment for next car, February 2017
                          • A minority of buyers are interested in buying online
                            • Figure 9: Likelihood of buying next car online, February 2017
                          • Independent and dealer websites dominate for online purchasing
                            • Figure 10: Preferred internet, February 2017
                          • Petrol leads as the preferred fuel for future car purchasers
                            • Figure 11: Preference for future fuel types, February 2017
                          • Diesel emission testing scandal records high awareness
                            • What we think
                            • Issues and Insights

                              • Have car sales reached a peak?
                                • The facts
                                  • The implications
                                    • Diesel sales appear to be in reverse
                                      • The facts
                                        • The implications
                                          • Recent investment in online sales may finally signal growth for this channel
                                            • The facts
                                              • The implications
                                              • The Market – What You Need to Know

                                                • Car sales surpass 10 million in 2016
                                                  • Financial factors are a major factor behind stronger sales
                                                    • Used car sales dominate the market
                                                      • The dominance of diesel would appear to be at an end
                                                        • Dealers dominate new and used car sales
                                                          • Rising costs and competition from other forms of transport remain a threat
                                                          • Market Size and Forecast

                                                            • Car purchases breach 10 million units per year for the first time in 2016
                                                              • Figure 12: UK new and used car sales, by volume, 2011-21
                                                              • Figure 13: Best- and worst-case forecasts for UK new and used sales, 2011-21
                                                            • Forecast methodology
                                                              • The impact of the EU referendum vote
                                                                • UK car market is performing better than could have been expected
                                                                  • Figure 14: Alternative market scenarios for the post-Brexit car market, at current prices, 2016-21
                                                                  • Figure 15: Detailed post-Brexit scenarios for UK new and used car sales, at current prices, 2016-21
                                                                • Wider demand for vehicles is set to soften after a period of expansion
                                                                • Market Segmentation

                                                                  • Used cars continue to remain popular with purchasers
                                                                    • Figure 16: New and used car market volumes, 2011-16
                                                                  • South East accounts for a fifth of new car registrations
                                                                    • Figure 17: New car registrations by region, 2011-15
                                                                  • Private sales of new cars show signs of stagnation
                                                                    • Figure 18: UK new registrations of motor vehicles, 2011-16
                                                                  • Company car purchases dominate but are in decline
                                                                    • Figure 19: New car registrations by keeper, 2011-15
                                                                  • Dual and multipurpose vehicles benefit from increased interest
                                                                      • Figure 20: New car registrations, by broad segment, 2011-16
                                                                    • Private buyers switching to lower medium and dual purpose cars
                                                                      • Figure 21: Share of vehicle types amongst private purchasers, 2011-16
                                                                    • Popularity of diesel suffers…
                                                                      • Figure 22: Sales of new cars by fuel type, 2011-16
                                                                    • …as interest in purchasing AFVs grows
                                                                      • Figure 23: Hybrid and electric new car registrations (Great Britain), by volume*, 2011-21
                                                                  • Channels to Market

                                                                    • Dealers are growing their share of the overall market…
                                                                      • Figure 24: Sales of new and used car volumes, by channel, 2013-16
                                                                    • …as well as the used car market
                                                                      • Figure 25: Sales of new and used car volumes, by channel, 2013-16
                                                                    • Number of dealer outlets record stability
                                                                      • Figure 26: Number of UK franchised dealer outlets, 2000-17
                                                                    • Most major manufacturers have rationalised their site portfolio
                                                                      • Major names dominate the franchised dealer market
                                                                        • Figure 27: Top 10 main dealership groups in the UK, by turnover 2013-15
                                                                      • Independent sector dominated by car supermarkets
                                                                        • Figure 28: Top 10 independent dealership groups in the UK, by turnover, 2015
                                                                      • Renewed interest in the internet
                                                                        • Figure 29: new dedicated manufacturer online portals (UK) since mid-2016
                                                                    • Market Drivers

                                                                      • Consumer confidence continues to increase
                                                                        • Figure 30: Mintel’s well-being index, February 2009-January 2017
                                                                      • Loan rates remain low…
                                                                        • Figure 31: Monthly percentage values of selected interest rates, January 2008-February 2017
                                                                      • …and help to boost consumer lending for car purchases
                                                                        • Figure 32: Value of advances (£mn) on sales of all cars bought on finance by consumers through dealerships, 2011-16
                                                                      • Low levels of inflation assisting car buyers
                                                                        • Figure 33: Annual change in CPI, 2005-16
                                                                      • Insurance costs are on the way up
                                                                        • Figure 34: Average premium for comprehensive car insurance policies, 2012-16
                                                                      • Increased use of public transport
                                                                        • Figure 35: Public transport passenger journeys (Great Britain), 2004/15-2015/16
                                                                      • Number of taxi and private hire licences is growing
                                                                        • Figure 36: Total licensed taxi and private hire vehicles (England and Wales), 2005-15
                                                                      • Car rental continues as a direct alternative to purchasing…
                                                                        • Figure 37: Size of fleet and Number of rentals, 2010-16
                                                                      • …while car club membership approaches a quarter of a million
                                                                        • Figure 38: Car club vehicle and membership growth, June 2008-November 2016
                                                                    • Companies and Brands – What You Need to Know

                                                                      • Mixed fortunes for car manufacturers…
                                                                        • ...and for established models
                                                                          • Dealers address customer experience
                                                                            • Online receives increased interest as a sales channel
                                                                              • Advertising expenditure expands
                                                                              • Market Share

                                                                                • Ford, Vauxhall and Volkswagen suffer a reversal in their fortunes
                                                                                  • Premium marques continue to make ground as consumers trade up
                                                                                    • Value brands are also growing in popularity illustrative of further polarisation
                                                                                      • Figure 39: Manufacturer shares of new car registrations, 2010, 2012, 2014 and 2016
                                                                                    • Fragmentation increasingly evident when it comes to model share
                                                                                      • Figure 40: Top 10 new car models, 2014-16
                                                                                    • Key Ford, Vauxhall and Volkswagen models dominate used car market
                                                                                      • Figure 41: Top 10 used car models, 2016
                                                                                  • Competitive Strategies

                                                                                    • Moving with the market
                                                                                      • Acquisition for growth
                                                                                        • Focusing in on customer experience
                                                                                          • New ways to reach customers
                                                                                          • Launch Activity and Innovation

                                                                                            • Online activity accelerates
                                                                                              • Citroën pledges to fix its prices
                                                                                                • SEAT looks at greater involvement with potential buyers
                                                                                                  • Tinder-like app that makes online car shopping simpler
                                                                                                  • Advertising and Marketing Activity

                                                                                                    • Expenditure up overall since 2012 albeit with slowdown since 2015
                                                                                                      • Figure 42: Recorded above-the-line, online display and direct mail total advertising expenditure by UK car dealers, 2012-16
                                                                                                    • Webuyanycar dominates a market that is slowly consolidating
                                                                                                      • Figure 43: Leading UK car dealers: Recorded above-the-line, online display and direct mail total advertising expenditure, 2012-16
                                                                                                    • Old media gives way to new
                                                                                                      • Figure 44: UK car dealers: Recorded above-the-line, online display and direct mail total advertising expenditure, by media type, 2012-16
                                                                                                    • Nielsen Ad Intel coverage
                                                                                                    • The Consumer – What You Need to Know

                                                                                                      • Car ownership has grown to stand at 71% of the adult population
                                                                                                        • 44% of car owners purchased their vehicle in the last two years
                                                                                                          • Over half of adults expect to buy a car in the coming three years
                                                                                                            • Interest in buying a new car has grown recently
                                                                                                              • Savings and part exchange are the most popular ways of buying a car
                                                                                                                • Online remains a niche channel although interest is higher amongst certain groups
                                                                                                                  • Petrol is the preferred fuel amongst car buyers
                                                                                                                    • Two thirds of adults are aware of the diesel emission testing scandal
                                                                                                                    • Car Ownership

                                                                                                                      • Car owners are in the majority
                                                                                                                        • Figure 45: Car ownership, February 2017
                                                                                                                      • Some adults more than others are likely to own a car
                                                                                                                        • Car ownership climbs between 2015 and 2017
                                                                                                                          • Figure 46: Car ownership, 2015-17
                                                                                                                        • A sizeable percentage of cars have been purchased in the last two years
                                                                                                                          • Figure 47: Statements about car ownership, February 2017
                                                                                                                        • Regional splits evident
                                                                                                                          • Young adults are important buyers
                                                                                                                            • Women show a growing interest in buying new
                                                                                                                              • Rising new car sales impact on this section of the market
                                                                                                                                • Figure 48: Car ownership, 2015-17
                                                                                                                              • Most adults without a car cannot drive
                                                                                                                                • Figure 49: Statements about those not owning a car, February 2017
                                                                                                                              • Age, household size and location are some of the factors affecting those without a car
                                                                                                                              • Car Purchasing Intentions

                                                                                                                                • Over half of adults plan to buy a car in the next three years
                                                                                                                                  • Figure 50: Intention to purchase a car in the next 3 years, February 2017
                                                                                                                                • Wealth plays a major factor
                                                                                                                                  • Full-time employed are key market
                                                                                                                                    • Lifestyle changes are important driver
                                                                                                                                      • Owners of new cars are more likely to purchase again in the next 3 years
                                                                                                                                        • Purchase intentions appear to be weakening…
                                                                                                                                          • Figure 51: Intention of purchasing a car/s in the next three years, 2015-17
                                                                                                                                        • …with less than half of those planning to purchase expecting to do so in the coming 12 months
                                                                                                                                          • Figure 52: Strongest intentions to purchase a car in the next 3 years, February 2017
                                                                                                                                        • Income and socio economic status have a big impact on purchasing intentions
                                                                                                                                          • Young adults appear less certain about purchasing
                                                                                                                                            • Families are important buyers in the coming six months
                                                                                                                                              • Cycle of replacement may explain purchasing plans for owners of new and used cars
                                                                                                                                                • Stability evident when it comes to purchasing intentions over the coming 3 years
                                                                                                                                                  • Figure 53: Intention of purchasing a car/s in the next three years, 2015-17
                                                                                                                                                • Nearly half plan to buy new in the coming 3 years
                                                                                                                                                  • Figure 54: Likelihood of new or used purchase, February 2017
                                                                                                                                                • Income is a major determinant of buying new
                                                                                                                                                  • Owners of new cars are more likely to purchase another new car
                                                                                                                                                    • Buying new records a sizeable increase in popularity since 2015
                                                                                                                                                      • Figure 55: Intention of purchasing a car/s in the next three years, 2015-17
                                                                                                                                                  • Methods of Payment

                                                                                                                                                    • Savings and part exchange with an existing vehicle are popular methods of payment
                                                                                                                                                      • Figure 56: Methods of payment for next car, February 2017
                                                                                                                                                    • Finance popular with wealthy and middle-aged adults
                                                                                                                                                      • Savings are important to older adults as well as those that are wealthy
                                                                                                                                                        • Innovative methods of ownership popular with new car buyers
                                                                                                                                                          • Use of innovative methods of payment appear to be growing in popularity
                                                                                                                                                            • Income is a major factor in encouraging interest in other methods of payment
                                                                                                                                                            • Interest in Online Purchasing

                                                                                                                                                              • Cautious interest in buying a car online
                                                                                                                                                                • Figure 57: Likelihood of buying next car online, February 2017
                                                                                                                                                              • Certain groups are more likely to favour online…
                                                                                                                                                                • …with families having an especially strong interest
                                                                                                                                                                  • Online is of greatest interest to owners and buyers of new cars who expect to purchase in the next three years
                                                                                                                                                                    • Independent and dealer websites dominate for online purchasing
                                                                                                                                                                      • Figure 58: Preferred internet channel for future car purchase, February 2017
                                                                                                                                                                  • Interest in Fuel Types

                                                                                                                                                                    • Petrol dominates for potential car buyers
                                                                                                                                                                      • Figure 59: Preference for future fuel types, February 2017
                                                                                                                                                                    • Hybrids are the most popular non-fossil fuel power source
                                                                                                                                                                      • Older adults appear wedded to petrol
                                                                                                                                                                        • Popularity of diesel amongst those living in cities continues
                                                                                                                                                                          • Parents and high earners are best target for alternative fuels
                                                                                                                                                                            • Recent car buyers show preference towards diesel as well as hybrid technology to power their next vehicle…
                                                                                                                                                                              • …yet for the wider market of future purchasers it is petrol that is preferred
                                                                                                                                                                                • Older and wealthier adults appear especially flexible when it comes to fuel choices
                                                                                                                                                                                  • Petrol sees surge in popularity between 2016 and 2017
                                                                                                                                                                                    • Figure 60: Preference for future fuel types, 2016-17
                                                                                                                                                                                • Awareness of Issues with Diesel Emission Testing

                                                                                                                                                                                  • Majority of adults aware of the diesel emission testing scandal
                                                                                                                                                                                    • Figure 61: Awareness of issues with diesel emission testing, February 2017
                                                                                                                                                                                  • Age and gender denote clear divisions in awareness
                                                                                                                                                                                    • Income also plays a big part in awareness
                                                                                                                                                                                      • Those most likely to purchase a car record highest awareness of scandal
                                                                                                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                        • Data sources
                                                                                                                                                                                          • Exclusions
                                                                                                                                                                                            • Market sizing and segment performance
                                                                                                                                                                                              • Abbreviations
                                                                                                                                                                                                • Consumer research methodology
                                                                                                                                                                                                • Appendix – Market Size and Forecast

                                                                                                                                                                                                  • New and used car sales
                                                                                                                                                                                                    • Figure 62: New and used car market volumes, 2011-21
                                                                                                                                                                                                  • Fan chart forecast

                                                                                                                                                                                                  Companies Covered

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                                                                                                                                                                                                  Car Purchasing Process - UK - April 2017

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