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Car Review - UK - February 2016

"The car market is diverse with sales comprising both new and used vehicles. Following the economic slowdown suffered by the UK in 2008/09 the market has been on an upward curve. Used cars dominate the market in terms of annual sales. Increased reliability of modern cars is helping to broaden the age of the car parc, resulting in 21.7% of cars being 12 years or older as of 2014 according to the SMMT."

This report covers the following areas:

  • Moving away from a one-size-fits-all approach to marketing
  • Use of sub brands to offer distinction within the market
  • AFV sales start to take off

This report provides a review of the UK car market. It addresses developments that are taking place in terms of sales as well as changes taking place in the structure of the market. The report looks in detail at the performance of manufacturers and brands as well as perceptions of brands and how consumers currently view some of the leading brands in the market. Innovation is a key area within the car market and the report highlights both general and specific developments that are occurring. The UK car review benefits from extensive consumer research which examines a number of issues such as payment methods used when purchasing, the role of online and attitudes towards various issues, as well as views on alternatives to car ownership.

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Table of contents

  1. Overview

    • What you need to know
      • Scope of this report
      • Executive Summary

          • The market
            • New and used sales show strong performance
              • Figure 1: UK new car sales, by volume, 2010-20
            • Dual and multipurpose vehicles exerting challenge on status quo
              • Figure 2: New car registrations by broad segment (share), 2010-15
            • Car parc supports large number of vehicles
              • Companies, brands and innovation
                • A highly fragmented market
                    • Figure 3: Attitudes towards and usage of selected brands, November 2015
                  • Investment in advertising remains largely stable
                    • Technology at the forefront of current innovations
                      • The consumer
                        • Used cars have a stronger profile in the market
                          • Figure 4: Type and age of car owned, December 2015
                        • Savings are the main way of buying a car
                          • Figure 5: Paying for a car, December 2015
                        • Dealers and garages are an important source for ideas
                          • Figure 6: Sources for ideas when purchasing, December 2015
                        • Online dominant for all but final decision making
                          • Figure 7: Use of online sources and dealer/garage services when purchasing, December 2015
                        • Customer service is important for buyers
                          • Figure 8: Attitudes towards car purchasing and ownership, December 2015
                        • Alternatives to car ownership receive a mixed reception
                          • Figure 9: Alternatives to car ownership, December 2015
                        • What we think
                        • Issues and Insights

                          • Moving away from a one-size-fits-all approach to marketing
                            • The facts
                              • The implications
                                • Use of sub brands to offer distinction within the market
                                  • The facts
                                    • The implications
                                      • AFV sales start to take off
                                        • The facts
                                          • The implications
                                          • The Market – What You Need to Know

                                            • Annual car sales surge to near 10 million
                                              • Dual and multipurpose vehicles popular with buyers
                                                • Interest in alternative fuelled vehicles strengths
                                                  • UK car parc supports wide range of vehicles by age
                                                    • Falling costs are helping buyers and owners
                                                    • Market Size and Forecast

                                                      • Growth in sales results in market reaching all-time high
                                                        • Figure 10: Best- and worst-case forecasts for UK new and used sales, 2010-20
                                                        • Figure 11: UK new and used sales, 2010-20
                                                    • Segment Performance

                                                      • Used sales dominate despite buoyant new car sector
                                                        • Figure 12: New and used car market volumes, 2010-15
                                                      • Dual and multipurpose vehicles record strong sales …
                                                          • Figure 13: New car registrations, by broad segment, 2010-15
                                                        • … to account for one in five new car sales
                                                          • Figure 14: New car registrations by broad segment (share), 2010-15
                                                        • Fragmentation evident during the past decade
                                                          • Figure 15: New car registrations by category, 2005, 2010 and 2015
                                                        • Progress made by diesel stalls as AFVs gain wider acceptance
                                                          • Figure 16: Sales of cars by fuel type, 2010-15
                                                      • Market Drivers

                                                        • Age of car parc is broadening
                                                          • Figure 17: Age structure of the car parc in years, 2012, 2013 and 2014
                                                        • Interest in future purchasing is focused on wealthy and young adults
                                                          • A fall in distance travelled is also evident
                                                            • Figure 18: Trips, distance travelled and time taken, 2004-2014
                                                          • Cars favoured for commuting and shopping
                                                            • Figure 19: Importance of transport types by specific reasons for travelling, 2014
                                                          • Used car prices tumble …
                                                            • Figure 20: Price indices of new and used cars, 2004-15
                                                          • … as does the price of fuel
                                                            • Figure 21: Typical retail prices of petroleum products in the UK, Jan 2013-Nov 2015
                                                          • Other factors influencing the market
                                                            • Number of larger households increases steadily
                                                              • Figure 22: Changes in single and multi-person households, 2006-15
                                                          • Key Players – What You Need to Know

                                                            • A highly fragmented market
                                                              • Supermini and lower medium models are the most popular
                                                                • BMW and Audi stand out as exclusive brands
                                                                  • Other European brands suffer from mixed fortunes
                                                                    • Advertising expenditure shows signs of recent fluctuations
                                                                    • Market Share

                                                                      • Ford and Vauxhall slump to less than 23% of the new car market
                                                                        • Many other established names also failing to make progress
                                                                          • Nissan, Mercedes-Benz, Audi and BMW are the big winners
                                                                            • Some manufacturers benefit from a turnaround in sales
                                                                              • Figure 23: Manufacturer shares of new car registrations, 2009, 2011, 2013 and 2015
                                                                            • Standalone brands further complicate the market
                                                                              • Figure 24: Selected standalone brand sales, 2013-15
                                                                            • Smaller cars prove most popular with buyers …
                                                                              • Figure 25: Top 10 car models, 2015
                                                                            • … with no evidence of this changing
                                                                              • Figure 26: Top 10 car segments, 2010 and 2015
                                                                          • Brand Research

                                                                              • Brand map: Not all brands are perceived the same
                                                                                  • Figure 27: Attitudes towards and usage of selected car brands, November 2015
                                                                                • Key brand metrics: BMW and Audi score well
                                                                                  • Figure 28: Key metrics for selected car brands, November 2015
                                                                                • Brand attitudes: Quality, value and trust help some brands stand out
                                                                                  • Figure 29: Attitudes, by car brand, November 2015
                                                                                • Brand personality (macro): Brands like BMW, Audi and Mini stand out from the crowd
                                                                                  • Figure 30: Car brand personality – Macro image, November 2015
                                                                                • Brand personality (micro): Many established brands have neutral or negative traits
                                                                                  • Figure 31: Car brand personality – Micro image, November 2015
                                                                                • Brand analysis
                                                                                  • BMW and Audi stand out as exclusive brands
                                                                                    • Mini offers something different
                                                                                      • Honda, Toyota and Nissan are trusted
                                                                                        • European brands express various qualities
                                                                                        • Advertising and Marketing Activity

                                                                                          • Sector advertising spend up 6.9% in 2015
                                                                                            • Figure 32: Recorded above-the-line, online display and direct mail total advertising expenditure by car manufacturers, 2011-15
                                                                                          • Family cars account for nearly a quarter of the sector’s advertising spend
                                                                                            • Figure 33: Recorded above-the-line, online display and direct mail total advertising expenditure, by type of car, 2011-15
                                                                                          • Ford regains top spot
                                                                                            • Figure 34: Recorded above-the-line, online display and direct mail total advertising expenditure by leading car manufacturers, 2011-15
                                                                                          • Majority of adspend channelled through TV
                                                                                            • Figure 35: Percentage media type split of recorded above-the-line, online display and direct mail total advertising expenditure by car manufacturers, 2011-15
                                                                                          • A note on adspend
                                                                                          • Launch Activity and Innovation

                                                                                              • Personalised virtual car design and the connected car
                                                                                                • Panoramic windscreen, automatic boot opening and new braking safety feature
                                                                                                  • Alternative-fuelled cars
                                                                                                    • Reimagining the car experience
                                                                                                    • The Consumer – What You Need to Know

                                                                                                      • Two thirds of adults own a car
                                                                                                        • Cars bought used have stronger profile amongst those owned
                                                                                                          • Savings are the most popular way of paying for a car
                                                                                                            • Dealers and garages are most important sources for information
                                                                                                              • Online dominates most stages of the decision making process
                                                                                                                • Three quarters of drivers expect good customer service
                                                                                                                  • Over half of adults have no interest in alternatives to car ownership
                                                                                                                  • Car Ownership

                                                                                                                    • Two thirds of adults own a car
                                                                                                                      • Figure 36: Car ownership, December 2015
                                                                                                                    • Various factors typify those who are more likely to own a car
                                                                                                                      • Car owners are likely to favour traditional alternatives to non ownership
                                                                                                                        • Cars purchased second hand account a larger section of the market
                                                                                                                          • Figure 37: Type and age of car owned, December 2015
                                                                                                                        • Men and young adults favour new cars
                                                                                                                          • Income appears to be a major factor in buying process
                                                                                                                            • Many recent buyers of new vehicles come from urban areas … and Scotland
                                                                                                                              • One in 10 who don’t own a car have access to another vehicle
                                                                                                                                • Figure 38: Reasons for not owning a car, December 2015
                                                                                                                            • Paying for a Car

                                                                                                                              • Cash or part exchange of a vehicle are by far the most popular choices
                                                                                                                                • Figure 39: Paying for a car, December 2015
                                                                                                                              • Young adults and urban buyers attracted by variety of payment choices
                                                                                                                                • Savings popular with older and rural buyers
                                                                                                                                  • Employed and self-employed buy cars differently
                                                                                                                                    • Buyers of new and used vehicles have preferences for particular payment methods
                                                                                                                                      • Three quarters of owners rely on only one form of payment
                                                                                                                                      • Sources for Ideas when Purchasing

                                                                                                                                        • Dealers dominate when looking for ideas
                                                                                                                                          • Figure 40: Sources for ideas when purchasing, December 2015
                                                                                                                                        • Men and older adults hold strong preferences
                                                                                                                                          • Wealthier individuals are more likely to consult a variety of sources
                                                                                                                                            • Buyers of new and used cars rely on different sources of information
                                                                                                                                              • Women and the less affluent tend to limit themselves when sourcing ideas
                                                                                                                                              • Online versus Dealer/Garage when Purchasing

                                                                                                                                                • Online dominates in early stages of buying process
                                                                                                                                                  • Figure 41: Use of on line sources and dealer/garage services when purchasing, December 2015
                                                                                                                                                • Older adults prefer to use the services of dealers and garages …
                                                                                                                                                  • … as do those in rural areas
                                                                                                                                                    • Dealers are important for new car buyers but online for those buying used
                                                                                                                                                      • Online is important in the early stages of decision making
                                                                                                                                                      • Attitudes towards Car Purchasing and Ownership

                                                                                                                                                        • Benefits from buying and owning car are of most interest
                                                                                                                                                          • Figure 42: Attitudes towards car purchasing and ownership, December 2015
                                                                                                                                                        • Car owners in the 25-34 age band appear most demanding
                                                                                                                                                          • Urban drivers also show strong interest in technology, functionality and the environment
                                                                                                                                                            • Wealthiest want more
                                                                                                                                                              • New car buyers are more receptive to innovation
                                                                                                                                                                • Interest in use of advertising by consumers varies
                                                                                                                                                                  • Four groups of buyers are identified
                                                                                                                                                                  • Alternatives to Car Ownership

                                                                                                                                                                    • Car hire and car sharing are popular choices
                                                                                                                                                                      • Figure 43: Alternatives to car ownership, December 2015
                                                                                                                                                                    • Young men are a key target market
                                                                                                                                                                      • Alternatives to car ownership perform better in urban areas
                                                                                                                                                                        • Income appears to play a major role in interest
                                                                                                                                                                          • New car buyers are more receptive to alternatives
                                                                                                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                            • Data Sources
                                                                                                                                                                              • Exclusions
                                                                                                                                                                                • Market sizing and segment performance
                                                                                                                                                                                  • Fan chart forecast
                                                                                                                                                                                    • Abbreviations

                                                                                                                                                                                    Companies Covered

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                                                                                                                                                                                    Car Review - UK - February 2016

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