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The Car Purchasing Process - UK - April 2016

“Car sales reached a new high of 9.93 million units in 2015 helped by a strong economy, low interest rates and the actions of manufacturers and retailers to encourage purchases. Looking ahead, although the market is showing signs of stability there remains considerable interest in purchasing a car. Around half of adults are set to buy in the coming three years with half of these purchases coming within the next 12 months.”
– Neil Mason, Head of Retail Research

This report looks at the following areas:

  • Growth in car sales slows after recent strong increases
  • Alternative-fuelled vehicles finally achieving breakthrough
  • Variable interest in in-car technology

Products covered in this Report

This Report investigates the car-buying process and the retailing of cars.
It focuses on both new and used car sales to private individuals although for the purposes of market context also includes car sales to other markets such as business and fleet.
It is exclusively focused on passenger vehicles, and therefore excludes any discussion of the market for light commercial vehicles or fleet vehicles.

Sales of new and used cars are at an all-time high. They are estimated to have reached 9.93 million units in 2015 which represents a 15% increase on sales in 2010 and a 2.7% increase on 2014. Used cars dominate the market with sales of 7.3 million units in 2015. New cars are a smaller, albeit more lucrative, segment of the market. Sales of new vehicles amounted to 2.63 million units in 2015 or 26.5% of the total market.
 
The UK car market supports a wider variety of manufacturers and brands. Buyer preferences currently favour smaller cars with those in the mini/supermini segment accounting for an estimated 38.9% of new car sales in 2015. Illustrating the fluidity of the market, recent demand has boosted interest in dual and multipurpose vehicles. This segment took an estimated 19.2% of new car sales in 2015 with this representing an increase of 5.4 percentage points on their share of sales in 2010. Franchised dealers dominate in terms of sales with around half of all purchases made from this channel. Together with private sellers and independent dealers, all three account for 96% of purchases.
 
Two thirds of adults own a car according to Mintel’s exclusive consumer research. The majority of cars in ownership (61%) were acquired more than two years ago. Some 33% were purchased used while 28% were purchased new. Looking forward, just over half (53%) of adults say their household will definitely or probably buy a car in the coming three years. Around four in 10 adults say they will consider a hybrid vehicle when it comes to their next car.
 
A further 14% would consider a plug-in hybrid while 12% would consider purchasing a fully electric car. Interest in in-car technology is variable with our research noting the strongest overall interest in parking assistance technology. In contrast, there is currently relatively little interest in technology designed to assist with driving.
 

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Table of contents

  1. Overview

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

          • The market
            • UK car purchases drive sales towards 10 million units per annum
              • Figure 1: UK new car sales, by volume, 2010-20
            • Used car sales dominate the market
              • Figure 2: New and used car market volumes, 2010-15
            • Franchised dealers account for nearly half of all purchases
              • Figure 3: Sales of new and used cars, by channel, 2015
            • Companies and brands
              • Ford and Vauxhall remain the most popular brands in the new car market
                • Dealers and manufacturers look to reduce costs
                  • Investment in advertising and promotion is growing
                    • Figure 4: Recorded above-the-line, online display and direct mail total advertising expenditure by UK car dealers, 2011-15
                  • The consumer
                    • Two thirds of adults own a car
                      • Figure 5: Car ownership, February 2016
                    • Majority of cars in ownership are over two years old
                      • Figure 6: Statements about car ownership, February 2016
                    • Main dealers account for around half of sales
                      • Figure 7: Where was last car purchased, February 2016
                    • Just over half of adults plan to purchase a car in the next three years
                      • Figure 8: Intention of purchasing a car/s in the next three years, February 2016
                    • Brake assistance/collision avoidance is most widely sought technical option
                      • Figure 9: Interest in driver assistance technology, February 2016
                    • Hybrid and electric power are more than just niche technologies
                      • Figure 10: Preferences for fuel types, February 2016
                    • What we think
                    • Issues and Insights

                      • Growth in car sales slows after recent strong increases
                        • The facts
                          • The implications
                            • Alternative-fuelled vehicles finally achieving breakthrough
                              • The facts
                                • The implications
                                  • Variable interest in in-car technology
                                    • The facts
                                      • The implications
                                      • The Market – What You Need to Know

                                        • Car purchases approach 10 million units a year
                                          • Low rates of finance increase affordability of car ownership
                                            • Falling costs of car ownership also assisting market
                                              • Used car sales dominate the market
                                                • Buyers opt towards purchasing smaller cars
                                                  • Recent strong demand for new car sales boosts profile of franchised dealers
                                                  • Market Size and Forecast

                                                    • Growth in sales results in market reaching all-time high
                                                        • Figure 11: Best- and worst-case forecasts for UK new and used sales, 2010-20
                                                        • Figure 12: UK new and used sales, 2010-20
                                                      • Forecast methodology
                                                      • Market Segmentation

                                                        • Used sales account for nearly three quarters of purchases
                                                          • Figure 13: New and used car market volumes, 2010-15
                                                        • Private sales are especially buoyant within the new car market
                                                          • Figure 14: UK new registrations of motor vehicles, 2010-15
                                                        • Smaller cars dominate new car purchases…
                                                          • Figure 15: New car registrations, by broad segment (share), 2010-15
                                                        • …boosted by demand from private buyers
                                                          • Figure 16: Share of vehicle types amongst private purchasers, 2011-15
                                                        • Dealers account for the majority of used car sales
                                                          • Figure 17: UK used sales of motor vehicles, by seller, 2010-15
                                                        • Petrol vehicles account for a declining share of new and used sales
                                                          • Figure 18: Sales of new and used cars, by fuel type, 2010-15
                                                      • Channels to Market

                                                        • Franchised dealers dominate the overall market
                                                          • Figure 19: Sales of new and used cars, by channel, 2013-15
                                                        • Franchised dealer network showing signs of stability
                                                          • Figure 20: Number of UK franchised dealer outlets, 2000-16
                                                        • Most major manufacturers have rationalised their site portfolio
                                                          • Figure 21: Top 10 dealers, by brand, 2010-16
                                                        • Major names dominate the sector
                                                          • Figure 22: Top 10 main dealership groups in the UK, by turnover, 2014
                                                        • Independent sector dominated by car supermarkets
                                                          • Figure 23: Top 10 independent dealership groups in the UK, by turnover and unit sales, 2014
                                                        • The internet fails to develop as a mainstream sales channel
                                                        • Market Drivers

                                                          • Improvements in consumer confidence evident
                                                            • Figure 24: Mintel’s wellbeing index, February 2009-November 2015
                                                          • Cost of finance continues to fall
                                                            • Figure 25: Monthly percentage values of selected interest rates, January 2008-February 2015
                                                          • Falling inflation likely to be proving helpful
                                                            • Figure 26: Annual change in CPI, 2005-15
                                                          • Net lending for car purchases continues to increase
                                                            • Figure 27: Value of advances (£mn) on sales of all cars bought on finance by consumers through dealerships, 2011-15
                                                          • Used car prices tumble…
                                                            • Figure 28: Price indices of new and used cars, 2004-15
                                                          • …as does that of fuel
                                                            • Figure 29: Typical retail prices of petroleum products in the UK, January 2013-November 2015
                                                          • Number of larger households increases steadily
                                                            • Figure 30: Changes in single and multi-person households, 2006-15
                                                          • Car rental continues as a direct alternative to purchasing…
                                                            • Figure 31: Number of rentals, 2010-15
                                                          • …as well as new methods based on pay-as-you-go access
                                                            • Figure 32: Car club vehicle and membership growth, June 2008-November 2015
                                                        • Key Players – What You Need to Know

                                                          • Major manufacturers lose out to smaller rivals
                                                            • Smaller models are proving popular
                                                              • Variety of strategies and tactics adopted by sellers
                                                                • Efforts to encourage sales focus on the innovative
                                                                  • Advertising and promotional support is increasing
                                                                  • Market Share

                                                                    • A dynamic market where many established manufacturers have lost out
                                                                      • Ford and Vauxhall slump and now account for just under a quarter of sales
                                                                        • German manufacturers are amongst the more successful of other companies in the market…
                                                                          • …as are a new wave of Asian imports
                                                                            • Many established companies are suffering from a fall in market share
                                                                              • Some manufacturers benefit from a turnaround in sales
                                                                                • Figure 33: Manufacturer shares of new car registrations, 2009-15
                                                                              • Buyers are more likely to purchase smaller cars
                                                                                • Figure 34: Top 10 car models, 2015
                                                                            • Competitive Strategies

                                                                                • Market innovations
                                                                                  • Use of promotions
                                                                                    • Partnerships to extend market reach
                                                                                      • Acquisition strategies
                                                                                        • Increasing physical presence in the market
                                                                                        • Launch Activity and Innovation

                                                                                            • 3D car configurator brings the car buying experience to life
                                                                                              • Augmented reality dealership showrooms
                                                                                                • App to encourage customers through the buying process
                                                                                                  • BMW makes buying a car online easier and more convenient
                                                                                                    • Drive Motors makes it possible for any car dealer to sell online
                                                                                                      • Web-based peer-to-peer marketplace for buying and selling used cars
                                                                                                        • Fixed-cost motoring package for teenage drivers
                                                                                                          • 60-minute dealership experience
                                                                                                            • Beacon technology
                                                                                                              • Car vending machine
                                                                                                                • Figure 35: Carvana automated, coin-operated car vending machine, Tennessee, US
                                                                                                            • Advertising and Marketing Activity

                                                                                                                • Figure 36: Recorded above-the-line, online display and direct mail total advertising expenditure by UK car dealers, 2011-15
                                                                                                              • Biggest car dealer advertisers
                                                                                                                • Figure 37: Leading UK car dealers: Recorded above-the-line, online display and direct mail total advertising expenditure, 2011-15
                                                                                                              • Radio and TV dominate
                                                                                                                • Figure 38: UK car dealers: Recorded above-the-line, online display and direct mail total advertising expenditure, by media type, 2011-15
                                                                                                              • Nielsen Ad Intel coverage
                                                                                                              • The Consumer – What You Need to Know

                                                                                                                • Two thirds of adults own a car
                                                                                                                  • Certain groups are more likely to have recently purchased a car
                                                                                                                    • Dealers are the preferred channel for purchasing
                                                                                                                      • Over half of households likely to buy a car in next three years
                                                                                                                        • Parking assistance technology is most popular with drivers
                                                                                                                          • Alternative fuels record sizeable niche interest
                                                                                                                          • Car Ownership

                                                                                                                            • Two thirds of adults own a car
                                                                                                                              • Figure 39: Car ownership, February 2016
                                                                                                                            • Certain adults are more likely than others to own a car
                                                                                                                              • Older cars dominate the market
                                                                                                                                • Figure 40: Statements about car ownership, February 2016
                                                                                                                              • New cars popular with men
                                                                                                                                • Young adults are more likely to be recent purchasers
                                                                                                                                  • Income plays a major factor in choice of vehicle
                                                                                                                                    • New cars popular with urban buyers
                                                                                                                                      • New car owners are the best prospects are future buyers
                                                                                                                                        • Fewer recent purchases accounted for by second-hand cars
                                                                                                                                          • Figure 41: Statements about car ownership, 2014 and 2016
                                                                                                                                        • Many of those without a car also do not hold a driving licence
                                                                                                                                          • Figure 42: Statements about car use by those not owning a car, February 2016
                                                                                                                                        • Low earners and women are least likely to drive
                                                                                                                                        • Where Last Car Was Purchased

                                                                                                                                          • Main dealers dominate the market
                                                                                                                                            • Figure 43: Where last car was purchased, February 2016
                                                                                                                                          • Wealthier and older adults are more likely to have purchased from dealers
                                                                                                                                            • Private sellers popular with young and those on a budget
                                                                                                                                              • Other channels have a much broader appeal
                                                                                                                                                • Dealers strengthening their presence within the market
                                                                                                                                                  • Figure 44: Where last car was purchased, 2012-16
                                                                                                                                              • Future Car Purchasing

                                                                                                                                                • Over half of adults plan to buy a car in the next three years
                                                                                                                                                  • Figure 45: Intention of purchasing a car/s in the next three years, February 2016
                                                                                                                                                • Young adults have strongest purchasing intentions
                                                                                                                                                  • Household size also impacts purchasing plans
                                                                                                                                                    • Income also plays its part
                                                                                                                                                      • Purchase intentions appear to be weakening
                                                                                                                                                        • Figure 46: Intention of purchasing a car/s in the next three years, 2014-16
                                                                                                                                                      • Half of those buying in the next three years plan to purchase in the coming 12 months
                                                                                                                                                        • Figure 47: Timeframe for future car purchase, February 2016
                                                                                                                                                      • Parents with children have a more immediate desire to purchase
                                                                                                                                                        • More planned purchases expected in the coming six months
                                                                                                                                                          • Figure 48: Intention of purchasing a car/s in the next three years, 2014-16
                                                                                                                                                        • No obvious preference towards buying new or used
                                                                                                                                                          • Figure 49: Intention of purchasing a car/s in the next three years, by new or second-hand purchase, February 2016
                                                                                                                                                        • Wealthy and older adults are more likely to be buying new
                                                                                                                                                          • Second-hand cars have a much broader appeal
                                                                                                                                                          • Interest in Driver Assistance Technology

                                                                                                                                                            • Parking assistance proves most popular
                                                                                                                                                              • Figure 50: Interest in driver assistance technology, February 2016
                                                                                                                                                            • Income plays its part in affecting interest
                                                                                                                                                              • Young drivers favour technology to assist driving…
                                                                                                                                                                • …while oldest focus on parking and collision avoidance
                                                                                                                                                                  • Urban drivers interested in technology to help their driving
                                                                                                                                                                    • New car owners show strong interest in ways to enhance their driving through new technology
                                                                                                                                                                      • Multiple technical enhancements popular with older and wealthier adults
                                                                                                                                                                      • Preferences for Fuel Types

                                                                                                                                                                        • Interest in other fuel sources is growing
                                                                                                                                                                          • Figure 51: Preferences for fuel types, February 2016
                                                                                                                                                                        • Men are receptive to new fuels
                                                                                                                                                                          • Income plays a major part in generating interest
                                                                                                                                                                            • Few differences amongst urban and rural drivers towards pure electric and plug-in hybrid vehicles
                                                                                                                                                                              • Potential to achieve increased AFV sales amongst undecided purchasers
                                                                                                                                                                                • Rural drivers record strong interest in multiple fuel sources
                                                                                                                                                                                • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                  • Data sources
                                                                                                                                                                                    • Exclusions
                                                                                                                                                                                      • Market sizing and segment performance
                                                                                                                                                                                        • Fan chart forecast
                                                                                                                                                                                          • Abbreviations
                                                                                                                                                                                            • Consumer research methodology

                                                                                                                                                                                            Companies Covered

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

                                                                                                                                                                                            The Car Purchasing Process - UK - April 2016

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