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The Car Market - Out of Recession? - UK - April 2011

The closure of the government-funded scrappage scheme will have made the end of 2010 feel like a recession for carmakers. Following a brief recovery in sales, new car registrations began slipping back last year.

This report updates the research published in Mintel’s Car Market – Into and Out of Recession – UK, January 2009 to assess whether consumers are feeling more or less positive about their prospects for buying a new car in the coming 12 months.

  • The best-performing brands in the recession were those best in terms of price, reliability and fuel consumption. With the increase in VAT, the added cost of servicing and booming petrol prices, car buyers are expected to continue to make these attributes the most important factors when choosing to buy a car this year.
  • Based on our consumer research, there are an estimated 2.8 million fewer people considering buying a new car in 2011 compared to 2008, and 0.8 million fewer considering a second-hand car.
  • Almost 27% of people plan to pay less than £4,000 for their next car. Given this amount is vastly below the price of even the cheapest new cars available on the market, the second-hand car market is expected to perform better than new cars in 2011.
  • People are holding onto their cars for longer; there are fewer drivers with a car purchased within the last 12 months than in 2008. Over-55s are particularly likely to be driving a car aged four or more years old and those holding onto their cars for the longest are over-65s with no children at home.
  • Younger adults appear keenest to acquire a new car (new or second-hand) in the next 12 months. Potential new car buyers are strongly biased towards 25-34-year-old parents with young children, and second-hand towards students.
  • Forecasts are gloomy up to 2015, with volume sales predicted to fall to 1.5 million.

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary – Is the Car Market Out of Recession?

            • The market
              • Figure 1: Best- and worst-case forecast of new registrations, 2005-15
            • Recovery in new car sales halted
              • Market factors
                • Sporadic economic recovery hampering car market
                  • Source of funds
                    • Help from car dealers
                      • Companies, brands and innovation
                        • Figure 2: Perceived important attributes of car brands, February 2011
                      • Perceived qualities
                        • Brand and preference
                          • The consumer
                            • Figure 3: Conversion rate: intention to purchase a car vs. actual sales, 2009 and extrapolated to 2011
                          • Conversion of intent into actual purchase
                            • What this might mean for 2011
                              • Interest in low-price vehicles higher than in 2009
                                • Choice dictated by affordability
                                  • What we think
                                  • Issues in the Market

                                      • When can the car market expect to see an increase in sales?
                                        • To what extent did scrappage aid the car market and what has been the market’s performance since it ended?
                                          • Who intends to buy a car in the coming 12 months and will this benefit the new or used sector?
                                            • What are buyers’ priorities when buying a car in the current climate and has this changed since 2008?
                                              • Which car brands are likely to do best?
                                              • Future Opportunities

                                                  • Trend: Customization
                                                    • Trend: Sense of the Intense
                                                    • Market Environment

                                                      • Key points
                                                        • Faltering economy
                                                          • Figure 4: Consumer confidence index and percentage change in new registrations, 2005-11
                                                        • Confidence hit by shock fall in GDP
                                                          • Figure 5: GDP quarterly percentage change, Q1 2004-Q4 2010
                                                        • Spending holds up
                                                          • Figure 6: GDP, PDI, consumer expenditure and savings, at current prices, 2005-15
                                                        • Rising unemployment heightens fears over job security
                                                          • Figure 7: Employment and unemployment, by gender, 2005-15
                                                        • Car and petrol prices rising
                                                          • Life after scrappage
                                                          • Market Size and Forecast

                                                            • Key points
                                                              • Signs of recovery
                                                                • New car registrations
                                                                  • Figure 8: Volume of new car sales, with and without SIS, 2003-15
                                                                  • Figure 9: Total volume of new car registrations, Including estimates without SIS, 2003-15
                                                                • Used car sales
                                                                  • Private purchases taking greater share
                                                                    • Figure 10: Sales of new vehicles, by customer type, 2006-10
                                                                  • Forecast
                                                                    • Figure 11: Best- and worst-case forecasts of new registrations, 2005-15
                                                                • Segment Performance

                                                                  • Key points
                                                                    • Scrappage scheme temporarily raises profile for new cars
                                                                      • Small to medium-sized cars dominate purchases
                                                                        • Figure 12: Sales of new vehicles, by type*, 2006-10
                                                                        • Figure 13: Sales of new vehicles, by purchaser type (units), 2010
                                                                      • Polarisation increasingly evident within new car market
                                                                        • Figure 14: Indexed sales of new vehicles, by type, 2006-10
                                                                      • Mini segment records strong growth
                                                                        • Trading up and beyond
                                                                          • Purchasers increasingly look at alternatives to petrol
                                                                            • Figure 15: Sales of new vehicles, by fuel type (units), 2006-10
                                                                        • Advertising and Promotion

                                                                          • Key points
                                                                            • Advertising suffers as recession begins to bite
                                                                              • Figure 16: Main media advertising expenditure on cars, 2006-10
                                                                            • Mass-market manufacturers dominate advertising expenditure
                                                                              • Figure 17: Leading car advertisers (cumulative spend of £50,000 or more), 2006-10
                                                                            • Decline in advertising expenditure affecting some more than others
                                                                              • Figure 18: Percentage change in adspend over 2006-10, by companies spending £10 million or more in 2010
                                                                            • Small cars receiving most promotional support
                                                                              • Figure 19: Top car models advertised (cumulative spend of £20,000 or more), 2006-10
                                                                            • Mass-market media lead in terms of popularity
                                                                              • Figure 20: Car advertising, percentage share by media type, 2006-10
                                                                              • Figure 21: Top 20 car models advertised in 2010
                                                                          • The Car Owner – Trends in Ownership

                                                                            • Key points
                                                                              • Car ownership
                                                                                • Figure 22: New and second-hand car ownership, by demographics, 2008 and 2010
                                                                              • Lifestage analysis
                                                                                • Figure 23: Car ownership, by working status, lifestage and Mintel’s Special Groups, 2010
                                                                            • The Car Buyer – Purchasing Cycles

                                                                              • Key points
                                                                                • Trends in purchasing
                                                                                  • Figure 24: When obtained (only car or most recently obtained car), 2004-10
                                                                                  • Figure 25: Time since purchased last car, 2010
                                                                              • Purchase Intentions – New or Second-hand

                                                                                • Key points
                                                                                  • Conversion rate
                                                                                    • Figure 26: Intention to buy a car in the next 12 months, 2008 and 2011
                                                                                    • Figure 27: Conversion of intention to buy into purchase, 2009 and 2011
                                                                                  • Who intends to buy a car in 2011?
                                                                                    • Replacement or new demand
                                                                                      • Figure 28: Type of car/motorbike intend to buy, by working status, lifestage and Mintel’s Special Groups, 2010
                                                                                  • The Consumer – Potential Cost of Next Car

                                                                                    • Key points
                                                                                      • Consumers want to spend less in 2011 than in 2009
                                                                                          • Figure 29: Total cost of the car, 2008 and 2011
                                                                                        • Price paid for new vs. second-hand
                                                                                          • Figure 30: Total cost of the car – new vs. second-hand, February 2011
                                                                                        • Evidence of two price clusters within market
                                                                                          • Age plays a major role in how much consumers spend
                                                                                            • Men also likely to spend more on a vehicle
                                                                                              • Features
                                                                                                • Figure 31: Ranked order of importance of features when choosing to buy a car, December 2008 and February 2011
                                                                                                • Figure 32: Important features of next car – new vs. second-hand, February 2011
                                                                                                • Figure 33: Important criteria when choosing to buy a car, by total cost of the car, February 2011
                                                                                                • Figure 34: Important criteria when choosing to buy a car, by total cost of the car (continued), February 2011
                                                                                              • Three distinct purchasing segments appear to exist
                                                                                              • Consumer – Brand Perceptions

                                                                                                • Key points
                                                                                                  • Affordable Ford
                                                                                                    • Figure 35: Makes of car considered for next purchase, 2008 and 2011
                                                                                                  • Price positioning of car brands
                                                                                                    • Figure 36: Makes of new car seriously considered, by average price prepared to pay, February 2011
                                                                                                    • Figure 37: Makes of second-hand car seriously considered, by average price prepared to pay, February 2011
                                                                                                  • Important features by brand
                                                                                                      • Figure 38: Key attributes, by selected brands, indexed, February 2011
                                                                                                      • Figure 39: Perceived positive and negative brand attributes, February 2011
                                                                                                  • Consumer – How to Finance Next Car Purchase

                                                                                                    • Key points
                                                                                                      • Cash and part-exchange account for over half of all purchases
                                                                                                        • Use of credit is more limited
                                                                                                          • Figure 40: Trends in financing next car purchase, 2008 and 2011
                                                                                                        • Use of credit is more limited
                                                                                                          • Cash appeals more to some than others
                                                                                                            • Credit proves popular with middle-aged purchasers
                                                                                                              • Credit is more important for finance for those purchasing a vehicle new…
                                                                                                                • Figure 41: How the largest part of the next car’s purchase cost would be financed, by intention to buy a new or second-hand car in the next 12 months, February 2011
                                                                                                              • ...with cash more important for those purchasing a vehicle less than £5,000
                                                                                                                • Figure 42: How the largest part of the next car’s purchase cost would be financed, by total cost of the car, February 2011
                                                                                                                • Figure 43: How the largest part of the next car’s purchase cost would be financed, by total cost of the car (continued), February 2011
                                                                                                                • Figure 44: How to finance the largest part of the next car’s purchase cost, by total cost of the car, February 2011
                                                                                                              • Where next car will be bought
                                                                                                              • Target Groups

                                                                                                                  • Men
                                                                                                                    • Personality types
                                                                                                                      • Figure 45: Mr Britain male groups, December 2010
                                                                                                                    • Car ownership
                                                                                                                      • Future car preference
                                                                                                                        • Women
                                                                                                                          • Personality types
                                                                                                                            • Figure 46: Ms Britain female groups, December 2010
                                                                                                                          • Car ownership
                                                                                                                            • Future car preference
                                                                                                                            • Appendix – Advertising

                                                                                                                                • Figure 47: Leading car advertisers’ annual spend (spending £10 million or more in 2010*), 2006-10
                                                                                                                                • Figure 48: Leading car advertisers’ annual spend (spending up to £10 million in 2010*), 2006-10
                                                                                                                            • Appendix – Purchasing Cycles

                                                                                                                                • Figure 49: Time since purchased most recent car, by demographics, 2008 and 2010
                                                                                                                              • Lifestage
                                                                                                                                • Figure 50: Time since purchased main car, by demographics, 2010
                                                                                                                                • Figure 51: Intention for someone in the family to buy a car in the next 12 months, new vs. second-hand, by demographics, February 2011
                                                                                                                                • Figure 52: Intention to buy a vehicle, by working status, lifestage and Mintel’s Special Groups, 2010
                                                                                                                                • Figure 53: Type of car intend to buy, by demographics, 2008 and 2010
                                                                                                                                • Figure 54: Total cost of the car, by demographics, February 2011
                                                                                                                                • Figure 55: Makes of car seriously considered, by total cost of the car, February 2011
                                                                                                                                • Figure 56: Makes of car seriously considered, by total cost of the car (continued), February 2011
                                                                                                                            • Appendix – Target groups

                                                                                                                                • Figure 57: Personality profile, Mr Passive
                                                                                                                                • Figure 58: Personality profile, Mr Accomplished
                                                                                                                                • Figure 59: Personality profile, Mr Uncomplicated
                                                                                                                                • Figure 60: Personality profile, Mr Exuberant
                                                                                                                                • Figure 61: Personality profile, Mr Cultured
                                                                                                                                • Figure 62: Personality profile, Ms Passive
                                                                                                                                • Figure 63: Personality profile, Ms Cultured
                                                                                                                                • Figure 64: Personality profile, Ms Accomplished
                                                                                                                                • Figure 65: Personality profile, Ms Uncomplicated
                                                                                                                                • Figure 66: Personality profile, Ms Exuberant
                                                                                                                                • Figure 67: Current car ownership, by male personality groups, December 2010
                                                                                                                                • Figure 68: Future car preferences, by male target groups, December 2010
                                                                                                                                • Figure 69: Age of car, by female target groups, December 2010
                                                                                                                                • Figure 70: Brand of cars driven, by female target groups, December 2010

                                                                                                                            Companies Covered

                                                                                                                            • AB Volvo
                                                                                                                            • Alfa Romeo
                                                                                                                            • Audi United Kingdom
                                                                                                                            • Automobile Association (AA)
                                                                                                                            • Bayerische Motoren Werke AG (BMW)
                                                                                                                            • Chrysler LLC
                                                                                                                            • Driver and Vehicle Licensing Agency
                                                                                                                            • Fiat Auto
                                                                                                                            • Ford Motor Company Limited (UK)
                                                                                                                            • Honda Motor Co. Ltd (UK)
                                                                                                                            • Hyundai Car (UK) Ltd
                                                                                                                            • Jaguar Cars Limited
                                                                                                                            • Kia Motors UK Ltd
                                                                                                                            • Land Rover UK
                                                                                                                            • Mazda Motors UK Ltd
                                                                                                                            • Mercedes-Benz UK
                                                                                                                            • Mitsubishi Motors Corporation
                                                                                                                            • Nissan Motor (GB) Ltd
                                                                                                                            • Peugeot Motor Company Plc
                                                                                                                            • Porsche Cars Great Britain Ltd
                                                                                                                            • PSA Peugeot Citroën S.A.
                                                                                                                            • Renault (UK) Ltd
                                                                                                                            • Royal Automobile Club
                                                                                                                            • Saab Automobile AB
                                                                                                                            • SEAT SA
                                                                                                                            • Skoda Auto a.s.
                                                                                                                            • Subaru (UK) Ltd
                                                                                                                            • Suzuki GB PLC
                                                                                                                            • Toyota (GB) PLC
                                                                                                                            • Toyota Motor Corporation
                                                                                                                            • Vauxhall Motors Ltd
                                                                                                                            • Volkswagen UK

                                                                                                                            The Car Market - Out of Recession? - UK - April 2011

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