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Small Green Cars and Alternative Fuels - UK - December 2009

  • The 24% increase in new small car registrations in the UK in 2009 while the new car market as a whole continued to fall, has benefitted manufacturers with a strong small car range with the top selling brands being Hyundai, Ford, Toyota and Fiat.
  • The ending of the scrappage scheme in early 2010 will result in sales of superminis such as the Ford Fiesta and Vauxhall Corsa falling by 2% while sales of cars in the mini segment will continue to rise with an increase of 10% in 2010. This is more likely to benefit manufacturers such as Hyundai, smart, Kia and Suzuki.
  • New car buyers have bought small fuel-efficient petrol cars under the scrappage scheme rather than diesel or alternative fuel cars including electric and hybrid cars which have accounted for less than 1% of sales under the scheme. Car buyers have therefore not taken advantage of the £2,000 rebate to buy an electric or hybrid car.
  • For most car buyers, factors such as price, reliability and fuel economy are a much higher priority in the car purchase decision than environmental benefits. To increase the sales of electric and hybrid cars, manufacturers and dealers must emphasise fuel economy over the environmental benefits of electric and hybrid cars.
  • Although 42% of car owners would seriously consider buying an electric or hybrid car, 65% are put off by the limited range of electric cars and 66% are not prepared to pay a premium for the latest hybrid or electric cars.
  • The higher cost of electric or hybrid cars will create a market opportunity for the leasing or rental of cars rather than outright ownership. As the necessity grows to reduce car use, rather than owning a car that stands idle for periods of time, it may become more cost effective to rent or lease an electric or hybrid car.

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Table of contents

  1. Issues in the Market

      • Key issues
        • Definition
          • Abbreviations
          • Future Opportunities

              • Renting rather than ownership
                • Subtle persuasion?
                • Market in Brief

                  • Fall in new car sales
                    • Rise in small car sales
                      • Low take-up of alternative-fuel vehicles
                        • High purchase costs and limited range
                          • Environmental concerns require longer-term change
                            • Electric vehicles are the future
                              • Hybrids are an interim technology
                                • Consumers more concerned with economy than the environment
                                  • Market electric cars on basis of economic cost benefits not environmental benefits
                                  • Internal Market Environment

                                    • Key points
                                      • Trend to fewer car sales
                                        • Figure 1: New car registrations and used car sales, 2004-09
                                      • Longer car replacement cycles
                                        • Figure 2: When obtained (only car or most recently obtained car), 2004-09
                                      • Diesels have accounted for more new car sales…
                                        • Figure 3: New car registrations, by fuel type, 2000-09
                                      • …but alternative fuels making little impression
                                        • CO2-based car tax
                                          • Scrappage scheme lifts retail sales
                                            • Figure 4: New car registrations, by market segment, May-October 2009
                                          • Manufacturers of small cars benefit from scrappage scheme
                                            • Figure 5: Manufacturer new car registrations under scrappage scheme, May-October 2009
                                          • Manufacturers under pressure to reduce emissions
                                            • New car CO2 emissions falling
                                              • Figure 6: UK new car average CO2 emissions, 1998-2008
                                            • The need for alternative fuels
                                              • Fuel prices and fuel price shocks
                                                • Figure 7: Monthly UK petrol diesel and oil price trends, 2008
                                                • Figure 8: Petrol, diesel and LPG prices, duty and VAT, September 2009
                                              • An electric future?
                                                • Infrastructure investment
                                                • Broader Market Environment

                                                  • Key points
                                                    • Consumer priorities shift away from spending and towards saving
                                                      • Figure 9: GDP, PDI, consumer expenditure and savings, at current prices, 2004-14
                                                      • Figure 10: GDP, PDI, consumer expenditure and savings, at constant 2004 prices, 2004-14
                                                    • Moving out of recession?
                                                      • Figure 11: GDP quarterly percentage change, 2004-09
                                                    • Reduced growth in employment
                                                      • Figure 12: Employment and unemployment, by gender, 2004-14
                                                    • More families?
                                                      • Figure 13: Trends in the age structure of the UK population, by gender, 2004-14
                                                  • Competitive Context

                                                    • Key points
                                                      • Global warming, emissions and rising oil prices
                                                        • Zero-emission vehicles
                                                          • The alternative-fuel opportunity
                                                            • A lack of distribution infrastructure
                                                              • Standard hydrocarbon fuels
                                                                • Petrol cars
                                                                  • Diesel cars
                                                                    • Alternative fuels
                                                                      • Biodiesel
                                                                        • Ethanol and bio-ethanol
                                                                          • LPG
                                                                            • Compressed Natural Gas
                                                                              • Electric, hybrid and fuel cell technology
                                                                                • Electric cars
                                                                                  • Hybrid cars
                                                                                    • Hydrogen fuel cells
                                                                                    • Strengths and Weaknesses in the Market

                                                                                        • Strengths
                                                                                          • Weaknesses
                                                                                          • Who’s Innovating?

                                                                                            • Key points
                                                                                              • Toyota and Honda lead hybrid and fuel cell charge
                                                                                                • Peugeot Zero Emission BB1
                                                                                                  • Renault’s electric concepts
                                                                                                    • Volkswagen’s concepts
                                                                                                      • REVA’s new models
                                                                                                        • Axon plug-in hybrid
                                                                                                          • GM range extender vehicles
                                                                                                            • Tesla Motors
                                                                                                              • Mitsubishi iMiEV
                                                                                                                • Nissan LEAF electric car
                                                                                                                  • Bosch stop-start technology
                                                                                                                  • Market Size and Forecast

                                                                                                                    • Key points
                                                                                                                      • Market size
                                                                                                                        • Figure 14: UK sales of small and alternatively fuelled cars (AFVs), 2004-09
                                                                                                                        • Figure 15: Sales of petrol, diesel and AFV cars, 2004-09
                                                                                                                      • Sales of small and AFV cars outperform rest of market
                                                                                                                        • Figure 16: Sales of small and AFV cars and total car market, 2004-09
                                                                                                                      • Market dependent upon scrappage scheme?
                                                                                                                        • Forecast
                                                                                                                          • Figure 17: Forecast UK sales of small and alternatively fuelled cars (AFVs), 2004-14
                                                                                                                        • Factors used in the forecast
                                                                                                                        • Segment Performance

                                                                                                                          • Key points
                                                                                                                            • Superminis are the largest segment
                                                                                                                              • Figure 18: Sales of mini, supermini and AFV cars, 2004-09
                                                                                                                            • Hybrids dominate the AFV market
                                                                                                                              • Figure 19: Sales of alternatively fuelled cars, by fuel type, 2003-08
                                                                                                                            • Trend in sales of small cars rises above rest of the market
                                                                                                                              • Figure 20: Sales of mini and supermini cars, 2003-08
                                                                                                                            • Mini segment models
                                                                                                                              • Figure 21: Mini segment top five selling models, 2008
                                                                                                                            • Supermini segment models
                                                                                                                              • Figure 22: Supermini segment top five selling models, 2008
                                                                                                                          • Companies and Products

                                                                                                                            • Key points
                                                                                                                              • Eco branding
                                                                                                                                • Figure 23: Car manufacturer eco brands, 2008
                                                                                                                              • Lower-emission small cars
                                                                                                                                • Figure 24: Lowest-emission petrol/diesel cars in UK market, 2008
                                                                                                                              • Small electric cars
                                                                                                                                • Figure 25: Principal electric car models in the UK market, 2008
                                                                                                                              • Toyota
                                                                                                                                • Toyota electric vehicles
                                                                                                                                  • Honda
                                                                                                                                    • Honda electric vehicles
                                                                                                                                      • Honda alternative-fuel vehicles
                                                                                                                                        • Ford
                                                                                                                                          • Ford electric vehicles
                                                                                                                                            • Ford alternative-fuel vehicles
                                                                                                                                              • PSA Peugeot Citroën
                                                                                                                                                • PSA electric vehicles
                                                                                                                                                  • Smart
                                                                                                                                                    • Smart electric vehicles
                                                                                                                                                      • Small specialist electric vehicle manufacturers
                                                                                                                                                      • Brand Communication and Promotion

                                                                                                                                                        • Key points
                                                                                                                                                          • Emotional or rational brand promotion?
                                                                                                                                                            • Economy a high priority…
                                                                                                                                                              • Figure 26: Most important features sought when buying a car, December 2008
                                                                                                                                                            • …but environmentalism a low priority
                                                                                                                                                              • Manufacturers cut small car ad spending despite sales rise
                                                                                                                                                                • Figure 27: Leading small passenger car advertisers, 2004/05-2008/09*
                                                                                                                                                              • Small car adspend tracks downward trend in sales
                                                                                                                                                                • Figure 28: Trend in small car adspend and small car sales volume, 2004/05-08/09
                                                                                                                                                            • Channels to Market

                                                                                                                                                              • Key points
                                                                                                                                                                • Dealership networks in decline
                                                                                                                                                                  • Figure 29: Number of UK franchised dealer outlets, 1999-2008
                                                                                                                                                                • Increasing outlet concentration
                                                                                                                                                                  • Figure 30: 20 largest dealer groups in UK, by sales turnover, April 2009
                                                                                                                                                                • Block exemption regulations
                                                                                                                                                                  • Limited electric vehicle distribution
                                                                                                                                                                  • The Consumer – Attitudes towards Electric and Hybrid Cars

                                                                                                                                                                    • Key points
                                                                                                                                                                        • Figure 31: Attitudes towards electric and hybrid cars, September 2009
                                                                                                                                                                      • Attitudes towards electric and hybrid cars by mileage
                                                                                                                                                                        • Figure 32: Attitudes towards electric or hybrid (petrol/electric) cars, by mileage driven, September 2009
                                                                                                                                                                      • Low-mileage drivers least likely to buy electric or hybrid car
                                                                                                                                                                      • The Consumer – Attitudes towards Alternative-fuel Cars

                                                                                                                                                                        • Key points
                                                                                                                                                                            • Figure 33: Attitudes towards alternative-fuel cars, September 2009
                                                                                                                                                                          • Are alternative fuels a short-term alternative to hybrid and electric cars?
                                                                                                                                                                            • Attitudes towards alternative-fuel cars by mileage
                                                                                                                                                                              • Figure 34: Attitudes towards alternative-fuel cars, by mileage driven, September 2009
                                                                                                                                                                            • Economics over environmentalism
                                                                                                                                                                            • Appendix – Attitudes Towards Electric or Hybrid Cars

                                                                                                                                                                                • Figure 35: Attitudes towards electric or hybrid (petrol/electric) cars, by demographics, September 2009
                                                                                                                                                                            • Appendix – Attitudes Towards Alternative-fuel Cars

                                                                                                                                                                                • Figure 36: Attitudes towards alternative-fuel cars, by demographics, September 2009
                                                                                                                                                                            • Appendix – Attitudes Towards Electric or Hybrid Cars

                                                                                                                                                                                • Figure 37: Attitudes towards electric or hybrid (petrol/electric) cars, by demographics, September 2009
                                                                                                                                                                            • Appendix – Attitudes Towards Alternative-fuel Cars

                                                                                                                                                                                • Figure 38: Attitudes towards alternative-fuel cars, by demographics, September 2009
                                                                                                                                                                            • Appendix – Attitudes Towards Electric, Hybrid and Alternative-fuel Cars

                                                                                                                                                                                • Figure 39: Attitudes towards electric or hybrid (petrol/electric) and alternative-fuel cars, by car ownership, September 2009
                                                                                                                                                                                • Figure 40: Attitudes towards electric or hybrid (petrol/electric) cars, by car ownership, September 2009
                                                                                                                                                                            • Appendix – Average Annual Mileage Driven by Demographics

                                                                                                                                                                                • Figure 41: Average annual mileage driven, by demographics, September 2009
                                                                                                                                                                            • Appendix – Vehicle Excise Tax Bands

                                                                                                                                                                                • Figure 42: Vehicle excise duty CO2 tax bands, 2009-11

                                                                                                                                                                            Companies Covered

                                                                                                                                                                            • AB Volvo
                                                                                                                                                                            • Alfa Romeo
                                                                                                                                                                            • Arnold Clark Automobiles Ltd
                                                                                                                                                                            • Aston Martin Lagonda Limited
                                                                                                                                                                            • Audi United Kingdom
                                                                                                                                                                            • Automobile Association (AA)
                                                                                                                                                                            • Bayerische Motoren Werke AG (BMW)
                                                                                                                                                                            • BMW (GB) Ltd
                                                                                                                                                                            • British Market Research Bureau (BMRB)
                                                                                                                                                                            • Chrysler LLC
                                                                                                                                                                            • Daihatsu Motor Co., Ltd.
                                                                                                                                                                            • Daimler AG
                                                                                                                                                                            • DaimlerChrysler UK Ltd
                                                                                                                                                                            • Driver and Vehicle Licensing Agency
                                                                                                                                                                            • Fiat Auto
                                                                                                                                                                            • Ford Motor Company Limited (UK)
                                                                                                                                                                            • General Motors Corporation
                                                                                                                                                                            • Government Actuary's Department (GAD)
                                                                                                                                                                            • Greenhous Group
                                                                                                                                                                            • Hartwell Motor Group Ltd
                                                                                                                                                                            • Honda Motor Co. Ltd (UK)
                                                                                                                                                                            • Hyundai Car (UK) Ltd
                                                                                                                                                                            • Inchcape plc
                                                                                                                                                                            • Inchcape Retail Ltd
                                                                                                                                                                            • Isuzu Motors Limited
                                                                                                                                                                            • Jardine Motor Group plc
                                                                                                                                                                            • Kia Motors UK Ltd
                                                                                                                                                                            • Lookers plc
                                                                                                                                                                            • Marshall Motor Group Ltd
                                                                                                                                                                            • Mercedes-Benz UK
                                                                                                                                                                            • Mitsubishi Motors Corporation
                                                                                                                                                                            • Nissan Motor (GB) Ltd
                                                                                                                                                                            • Office for National Statistics
                                                                                                                                                                            • Pendragon plc
                                                                                                                                                                            • Peugeot Motor Company Plc
                                                                                                                                                                            • Piaggio SpA
                                                                                                                                                                            • PSA Peugeot Citroën S.A.
                                                                                                                                                                            • Renault (UK) Ltd
                                                                                                                                                                            • Robert Bosch GmbH
                                                                                                                                                                            • Saab Automobile AB
                                                                                                                                                                            • SEAT SA
                                                                                                                                                                            • Skoda Auto a.s.
                                                                                                                                                                            • Society of Motor Manufacturers and Traders
                                                                                                                                                                            • Subaru (Fuji Heavy Industries Ltd.)
                                                                                                                                                                            • Suzuki GB PLC
                                                                                                                                                                            • Swatch
                                                                                                                                                                            • Sytner Group plc
                                                                                                                                                                            • Tata Group
                                                                                                                                                                            • The Colt Car Company Ltd (Mitsubishi Motors UK)
                                                                                                                                                                            • Toyota (GB) PLC
                                                                                                                                                                            • Toyota Motor Corporation
                                                                                                                                                                            • U.S. Environmental Protection Agency
                                                                                                                                                                            • Vauxhall Motors Ltd
                                                                                                                                                                            • Vertu Motors
                                                                                                                                                                            • Volkswagen UK

                                                                                                                                                                            Small Green Cars and Alternative Fuels - UK - December 2009

                                                                                                                                                                            £1,995.00 (Excl.Tax)