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UK Car Review - UK - February 2017

“The UK car market continues to develop and evolve. Sales are put above 10 million units for the first time in 2016 evidence of the continuing popularity of car ownership. Within the market, buyers are increasingly looking for vehicles that match their lifestyles with compact, multi-purpose and executive models currently benefiting from especially strong demand.”
– Neil Mason, Head of Retail Research

This Report discusses the following key topics:

  • New car sales suffer from slowdown in expansion
  • What future for diesel?
  • Can growth in hybrid and electric cars be maintained?

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Table of contents

  1. Overview

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

          • The market
            • Car sales reach all time high
              • Figure 1: UK new and used car sales, by volume, 2011-21
            • Smaller format cars account for over a third of new sales
              • Figure 2: New car registrations by broad segment (share), 2016
            • Cars are the preferred mode of transport for many
              • Figure 3: Mode share (average distance travelled), England, 2015
            • Companies, brands and innovation
              • A highly fragmented market
                • German brands are strongly differentiated from others in the market
                  • Figure 4: Attitudes towards and usage of selected brands, January 2017
                • Investment in advertising remains largely stable
                  • Innovation for all
                    • The consumer
                      • Most adults own a car
                        • Figure 5: Car ownership, November 2016
                      • New and used cars are both popular
                        • Figure 6: Age of car owned, November 2016
                      • Most adults who don’t own a car also don’t have access to one either
                        • Figure 7: Non car ownership, November 2016
                      • Small and medium-sized vehicles dominate the market
                        • Figure 8: Type of car owned, November 2016
                      • Petrol is the most popular fuel for cars
                        • Figure 9: Fuel used with main car, November 2016
                      • Commuting is a key use for a car
                        • Figure 10: Reasons for using a car, November 2016
                      • Improvements to current technology is more important than the introduction of new technology
                        • Figure 11: Future demands from suppliers, November 2016
                      • What we think
                      • Issues and Insights

                        • New car sales suffer from slowdown in expansion
                          • The facts
                            • The implications
                              • What future for diesel?
                                • The facts
                                  • The implications
                                    • Can growth in hybrid and electric cars be maintained?
                                      • The facts
                                        • The implications
                                        • The Market – What You Need to Know

                                          • 2016 sees car sales of 10 million+ for the first time
                                            • New car sales have been the stronger segment recently
                                              • Smaller and more versatile vehicles are proving popular with buyers
                                                • Franchised dealers dominate sales channels
                                                  • Growing car sales fail to raise car ownership
                                                    • Cars dominate over other transport alternatives
                                                    • Market Size and Forecast

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

                                                            • New car sales continue their upward trend
                                                              • Figure 16: New and used car market volumes, 2011-16
                                                            • Car parc expansion is also being accompanied by car parc ageing
                                                              • Figure 17: Age structure of the car parc in years, 2011-15
                                                            • Dual and multipurpose vehicles benefit from increased interest
                                                                • Figure 18: New car registrations, by broad segment, 2011-16
                                                              • … although it is mini/supermini and lower and upper medium that continue to dominate
                                                                • Figure 19: New car registrations by broad segment (share), 2011-16
                                                              • Interest in smaller and more versatile vehicles is evident from buyers
                                                                • Figure 20: New car registrations by category, 2005, 2010 and 2015
                                                              • Popularity of diesel appears to stall
                                                                • Figure 21: Sales of cars by fuel type, 2011-16
                                                            • Channels to Market

                                                              • Franchised dealers account for nearly half of all sales
                                                                • Figure 22: Sales of new and used cars, by channel, 2013-15
                                                            • Market Drivers

                                                              • Mixed messages when it comes to the affordability of motoring
                                                                • Figure 23: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2011-15
                                                              • Little evidence that growing car sales are increasing car ownership
                                                                • Figure 24: Percentage of households with car availability, in England, 2005-15
                                                              • Number of trips being taken is in decline
                                                                • Figure 25: Trips, distance travelled and time taken, 2005-15
                                                              • Cars still dominate when compared to other transport options
                                                                • Figure 26: Mode share (average distance travelled), England, 2015
                                                              • Cars favoured most for commuting and shopping…
                                                                • Figure 27: Importance of transport types by specific reasons for travelling (England), 2014
                                                              • … as well as by a cross section of adults
                                                                • Figure 28: Mode share (average distance travelled), England, 2015
                                                              • Over half of adults plan to buy a car in the next three years …
                                                                • Figure 29: Do you or someone else in your household plan to buy a car(s) within the next 3 years, February 2016
                                                              • … although there is no obvious preference towards buying new or used
                                                                • Figure 30: Intention of purchasing a car/s in the next three years, by new or second-hand purchase, February 2016
                                                              • Hybrid and electric cars set to play a greater part in the market
                                                                • Figure 31: Hybrid and electric new car registrations (Great Britain), by volume*, 2011-21
                                                              • Number of larger households continues to increase
                                                                • Figure 32: Changes in single and multi-person households, 2006-15
                                                              • UK population both growing and ageing
                                                                • Figure 33: Trends in the age structure of the UK population, 2011-21
                                                            • Companies and Brands – What You Need to Know

                                                              • Established manufacturers see market share fall back
                                                                • Smaller models remain popular with buyers
                                                                  • Innovation addressing all aspects of driving
                                                                    • Advertising expenditure is growing although directed towards particular types of car
                                                                      • Not all brands perceived the same
                                                                      • Market Share

                                                                        • Ford, Vauxhall and Volkswagen suffer a reversal in their fortunes
                                                                          • Premium marques continue to make ground as consumers trade up
                                                                            • Value brands are also growing in popularity illustrative of further polarisation
                                                                              • Figure 34: Manufacturer shares of new car registrations, 2010, 2012, 2014 and 2016
                                                                            • Performance of Nissan, Land Rover, Jaguar and MINI illustrates good performance for UK producers
                                                                              • Smaller models dominate sales
                                                                                • Figure 35: Top 10 car models, 2016
                                                                            • Launch Activity and Innovation

                                                                              • Hyundai looks at multiple power trains for its Ioniq model
                                                                                • Autodrive offering support for autonomous driving
                                                                                  • Volvo combines safety with features
                                                                                    • Honda Sensing offers new level of driver awareness
                                                                                      • Gesture control beginning to take off
                                                                                        • Ford partners with Amazon’s Alexa
                                                                                        • Advertising and Marketing Activity

                                                                                          • Promotional expenditure on an upward trajectory
                                                                                            • Figure 36: Recorded above-the-line, online display and direct mail total advertising expenditure by car manufacturers, 2012-16
                                                                                          • Family cars and 4x4 categories dominate activity
                                                                                            • Figure 37: Recorded above-the-line, online display and direct mail total advertising expenditure, by type of car, 2012-16
                                                                                          • Advertising expenditure closely mirrors market position
                                                                                            • Figure 38: Recorded above-the-line, online display and direct mail total advertising expenditure by leading car manufacturers, 2012-16
                                                                                          • Television advertising is the clear winner as other channels suffer from mixed fortunes
                                                                                            • Figure 39: Percentage media type split of recorded above-the-line, online display and direct mail total advertising expenditure by car manufacturers, 2012-16
                                                                                          • Nielsen Ad Intel coverage
                                                                                          • Brand Research

                                                                                              • Most German brands are performing well
                                                                                                  • Figure 40: Attitudes towards and usage of selected brands, January 2017
                                                                                                • Key brand metrics
                                                                                                  • Figure 41: Key metrics for selected brands, January 2017
                                                                                                • Brand attitudes: German brands are positioned well against quality
                                                                                                  • Figure 42: Attitudes, by brand, January 2017
                                                                                                • Brand personality: Volkswagen continues to be associated as being unethical
                                                                                                  • Figure 43: Brand personality – Macro image, January 2017
                                                                                                • Reliability differentiates many mass-market brands
                                                                                                  • Figure 44: Brand personality – Micro image, January 2017
                                                                                              • The Consumer – What You Need to Know

                                                                                                • A majority of adults own a car
                                                                                                  • Car ownership can be broadly split between new and used vehicles
                                                                                                    • Small and medium-sized vehicles are popular
                                                                                                      • Petrol is the most popular fuel
                                                                                                        • Commuting and shopping dominate key uses for a car
                                                                                                          • Drivers are looking for improvements rather than innovation
                                                                                                          • Car Ownership

                                                                                                            • 7 out of 10 adults currently own a car
                                                                                                              • Figure 45: Car ownership, November 2016
                                                                                                            • Wealth, gender and location are some of the factors that influence car ownership
                                                                                                              • Despite variations in ownership, the percentage of adults with a car is growing
                                                                                                                • Figure 46: Car ownership, 2014-16
                                                                                                            • Age of Car Owned

                                                                                                              • Broad spread of car owned by age
                                                                                                                • Figure 47: Age of car owned, November 2016
                                                                                                              • Older adults prefer owning used
                                                                                                                • Income is a major factor affecting choice
                                                                                                                  • Londoners have a preference for buying new
                                                                                                                    • Rising new car sales boost profile of those with a vehicle purchased new within the last 2 years
                                                                                                                      • Figure 48: Age of car owned, 2014-2016
                                                                                                                  • Non Car Ownership

                                                                                                                    • Most non car owners don’t have access to any vehicle
                                                                                                                      • Figure 49: Non car ownership, November 2016
                                                                                                                    • Young adults benefit in more affluent households
                                                                                                                    • Type of Car Owned

                                                                                                                      • Small and medium-sized vehicles are most popular with car owners
                                                                                                                        • Figure 50: Type of car owned, November 2016
                                                                                                                      • Small cars popular with young adults
                                                                                                                        • London – A market for compact and luxury cars
                                                                                                                          • SUVs attract older, rural and wealthier owners
                                                                                                                            • Compact cars are more likely to have been purchased in the last two years
                                                                                                                              • Medium saloon/hatchbacks make progress when it comes to ownership
                                                                                                                                • Figure 51: Car ownership, 2014 and 2016
                                                                                                                            • Fuels Used with Main Car

                                                                                                                              • Majority of cars owned are powered by petrol
                                                                                                                                • Figure 52: Fuel used with main car, November 2016
                                                                                                                              • Older adults have a preference for diesels
                                                                                                                                • Use of petrol and diesel appears linked with location
                                                                                                                                  • London records the strongest penetration of hybrids
                                                                                                                                    • New car buyers appear to have switched towards diesel
                                                                                                                                      • Diesel is popular with larger cars
                                                                                                                                      • Reasons for Using a Car

                                                                                                                                        • Commuting is the main reason for using a car
                                                                                                                                          • Figure 53: Reasons for using a car, November 2016
                                                                                                                                        • Older adults find different uses for their cars
                                                                                                                                          • Shopping dominates for less affluent, commuting for most affluent
                                                                                                                                          • Future Demands from Suppliers

                                                                                                                                            • Improvements to existing engines dominate over other demands
                                                                                                                                              • Figure 54: Future demands from suppliers, November 2016
                                                                                                                                            • Technical and environmental improvements are popular with young adults and those with children
                                                                                                                                              • Men are interested in alternative power sources
                                                                                                                                                • Those living in London are keen on vehicle features
                                                                                                                                                  • Presence of children drives interest in particular vehicle features
                                                                                                                                                    • Owners of older, used, cars show least interest in improvements
                                                                                                                                                      • Owners of compact cars exhibit strong environmental demands
                                                                                                                                                        • Diesel owners seem more demanding than those with petrol vehicles
                                                                                                                                                          • CHAID analysis
                                                                                                                                                            • Methodology
                                                                                                                                                              • Wealthy, urban adults hold good prospects for connectivity enhancements
                                                                                                                                                                • Figure 55: UK Car Review – CHAID – Tree output, November 2016
                                                                                                                                                                • Figure 56: UK Car Review – CHAID – Table output, November 2016
                                                                                                                                                            • 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.

                                                                                                                                                                        UK Car Review - UK - February 2017

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