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Used Car Market - UK - July 2010

This report analyses the market for cars bought and sold as second-hand which are also referred to throughout this report as used cars. The report analyses the retail market for used cars which are cars bought by private individuals in the Private and Light Goods (PLG) class which therefore excludes commercial vehicles.

  • Around 45% of all used car purchases are of cars costing less than £5,000. These are of little interest to the retail trade due to the higher potential warranty liability of this price category of cars which are likely to be older and higher mileage.
  • There is a large price overlap between new and used car purchase prices between £7,000 and £10,000 which gives car buyers the choice between a new small car from a volume car manufacturer or a used model from a premium car manufacturer.
  • There is a direct correlation between car sales and interest rates. When interest rates are low car sales tend to rise and vice versa when rates are high. Marginal increases in interest rates between 2004-08 resulted in a fall in both new and used car sales.
  • Around half of all used car sales are financed by cash purchases and around 35% are financed using some form of credit finance. With credit finance being less readily available following the financial crisis, a higher proportion of used car purchases will rely on cash savings and cash purchasing.
  • 44% of used car owners who bought their car as a main car and 30% of used car owners who bought their car as a second car used part-exchange with their old car to finance its replacement. Providing competitive part-exchange values will therefore remain crucial in a market facing a slow recovery in sales.
  • In 2009, 65% of those who intended to purchase a used car expected to make the purchase in the next two years. Furthermore, 12% of those who intended to buy within the next five years represented totally new demand as they are currently non-owners of any car.

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Table of contents

  1. Issues in the Market

      • Key issues
        • Definition
          • Abbreviations
          • Future Opportunities

              • Alternative forms of financing
                • Nostalgia and driving for pleasure
                • Market in Brief

                  • Used car market remains weak
                    • Sales growth constrained by finance and falling replacement frequency
                      • Major volume brands losing share to premium and Japanese brands
                        • Used car supermarkets accounting for a higher proportion of sales
                        • Internal Market Environment

                          • Key points
                            • Consumer expenditure on cars
                              • Figure 1: Consumer expenditure on cars and total consumer spending, 2003-09
                            • Recent purchasing of cars declining
                              • Figure 2: When obtained only car or most recently obtained car, 2004-08*
                            • Replacement cars dominate but on the decline
                              • Figure 3: First, additional or replacement car, 2006-08*
                            • Decline in households owning two cars
                              • Figure 4: Household ownership of cars in the UK, 2004-09
                            • Impact of new car market on used
                              • Figure 5: Private new car registrations and used car sales, 2004-09
                            • Impact of the scrappage scheme
                              • Used car resale values
                                • Figure 6: Monthly percentage change in new car prices and used car values, January 2008-May 2010
                              • Car sales and interest rates
                                • Figure 7: Total new and used car sales and interest rates, 2001-09
                              • The importance of finance
                                • Figure 8: Trend in retail car sales and car finance penetration, 2003-09
                                • Figure 9: Expected method of payment for next car, new and second-hand, December 2008
                              • The price overlap between new and used
                                • Figure 10: Expected cost of next car purchase, new and second-hand, December 2008
                              • Complaints against dealers rise
                              • Broader Market Environment

                                • Key points
                                  • Economic recovery on a knife edge
                                    • Figure 11: GDP quarterly percentage change, Q1 2004-Q1 2010
                                  • A higher sustained rate of unemployment
                                    • Figure 12: Employment and unemployment, by gender, 2005-15
                                  • Consumer spending set to recover
                                    • Figure 13: GDP, PDI, consumer expenditure and savings, at current prices, 2005-15
                                  • Rising affluence
                                    • Figure 14: Forecast adult population trends, by socio-economic group, 2005-15
                                  • Young families are a growth opportunity
                                    • Figure 15: Trends in the age structure of the UK population, 2005-15
                                  • So are the third age and retired lifestages
                                    • Figure 16: Forecast adult population trends, by lifestage, 2005-15
                                  • Smaller households and smaller cars?
                                    • Figure 17: UK households, by size, 2005-15
                                  • Rising internet penetration
                                    • Figure 18: Broadband penetration, 2004-09
                                • Competitive Context

                                  • Key points
                                    • Spending on personal transport
                                      • Figure 19: Spending on personal transport, at current prices, 2009
                                    • Car ownership becoming more expensive
                                      • Figure 20: Annual percentage change in transport costs, 2000-09
                                      • Figure 21: Price indices of new and used cars, 2000-09
                                    • Maintenance and fuel costs rising
                                      • Figure 22: Indices of personal transport prices, 2005-09
                                      • Figure 23: Trend in petrol and diesel pump prices, July 2000-July 2009
                                  • Strengths and Weaknesses in the Market

                                      • Strengths
                                        • Weaknesses
                                        • Who’s Innovating?

                                          • Key points
                                            • We buy any car
                                              • Smartphone applications
                                                • Car sales websites
                                                • Market Size and Forecast

                                                  • Key points
                                                    • Used car sales
                                                      • Figure 24: Value and volume of used car sales, 2005-15
                                                    • Factors used in the forecast
                                                      • Average used car values
                                                        • Figure 25: Average used car purchase prices, 2005-15
                                                    • Market Share

                                                      • Key points
                                                        • Market share by car manufacturer brand
                                                          • Figure 26: Car manufacturer shares of used car market sales, 2006-09
                                                          • Figure 27: Car manufacturer shares of used car market sales, 2006 and 2009
                                                      • Companies and Products

                                                          • Major players
                                                            • Pendragon Plc
                                                                • Figure 28: Key financials for the used car operations of Pendragon Plc, 2008 and 2009
                                                              • Inchcape Retail
                                                                  • Figure 29: Key financials for Inchcape’s retail operations in the UK, 2008 and 2009
                                                                • Sytner Group
                                                                    • Figure 30: Key financials for Sytner Group, 2007 and 2008*
                                                                  • Arnold Clark Automobiles
                                                                      • Figure 31: Key financials for Arnold Clark Automobiles, 2008 and 2009
                                                                    • Cargiant
                                                                        • Figure 32: Key financials for Cargiant Plc, 2007 and 2008*
                                                                      • UK Car Group
                                                                          • Figure 33: Key financials for UK Car Group, 2008 and 2009
                                                                      • Brand Communication and Promotion

                                                                        • Key points
                                                                          • Figure 34: Main monitored media advertising expenditure by motor dealers on new and used cars and commercial vehicles, 2006-10*
                                                                        • Used car supermarkets are high spenders
                                                                          • Figure 35: Spend by company (top 15 & others), 2006-10
                                                                        • Radio adspend has been maintained
                                                                          • Figure 36: Spend, by media type, 2006-10
                                                                        • Growth in use of digital media
                                                                        • Channels to Market

                                                                          • Key points
                                                                            • Figure 37: Used car sales, by distribution channel, 2009
                                                                          • Car dealers in decline
                                                                            • Figure 38: Number of franchised and independent car dealers in the UK, 2004-09
                                                                          • Used car sales crucial to franchised dealers
                                                                            • Volume and Japanese brands dominate manufacturer networks
                                                                              • Figure 39: Size of car manufacturer dealer networks, winter 2009
                                                                            • Approved Used programmes
                                                                              • Concentration of franchised outlets amongst dealer groups
                                                                                • Figure 40: Top ten franchised dealer groups, by turnover and number of outlets, 2010
                                                                              • Supermarkets dominate independent sector
                                                                                • Figure 41: Top ten independent car dealers, by turnover*, number of outlets and used car sales, 2009
                                                                            • Used Car Ownership

                                                                              • Key points
                                                                                • Demographics of used car ownership
                                                                                  • Figure 42: Used car ownership profile and penetration, by age of owner, 2009
                                                                                  • Figure 43: Used car ownership profile and penetration, by socio-economic group of owner, 2009
                                                                                • Types of used cars owned
                                                                                  • Age of car owned
                                                                                    • Figure 44: Year of registration of car owned, 2009
                                                                                  • When purchased
                                                                                    • Figure 45: When car was obtained, 2009
                                                                                  • Engine size of car owned
                                                                                    • Figure 46: Engine size of car owned, 2009
                                                                                  • Fuel type of car owned
                                                                                    • Figure 47: Type of fuel of car owned, 2009
                                                                                • Used Car Decision-making

                                                                                  • Key points
                                                                                    • Make and model
                                                                                      • Figure 48: Who decided on make and model, 2009
                                                                                      • Figure 49: Who decided on make and model – main car, by gender, age, socio-economic group and Mintel’s Special Groups, 2009
                                                                                    • Who paid for the car
                                                                                      • Figure 50: Who paid for the car – main and second car, 2009
                                                                                      • Figure 51: Who paid for car – main car, by gender, age, socio-economic group and Mintel’s Special Groups, 2009
                                                                                    • Part-exchange
                                                                                      • Figure 52: Part-exchange of previous car, 2009
                                                                                      • Figure 53: Part-exchanged main car, by year of registration, 2009
                                                                                      • Figure 54: Part-exchanged second car, by year of registration, 2009
                                                                                  • Car-buying Intentions

                                                                                    • Key points
                                                                                        • Figure 55: Intention to buy a car, 2009
                                                                                      • Young adults and young families most likely to buy used
                                                                                        • Potential for new demand as well as replacement
                                                                                          • Figure 56: Car ownership, by intention to buy a car in the next five years, 2009
                                                                                        • Used cars – the economic slowdown option?
                                                                                          • Figure 57: Ownership of new or second-hand car, by intention to buy a second-hand car in the next five years, 2009
                                                                                        • Purchase intention and car engine size
                                                                                          • Figure 58: Engine size of main car and second car, by purchase intention, 2009
                                                                                        • Recent replacements are best prospects for future replacements
                                                                                          • Figure 59: When main car and second car obtained, by purchase intention, 2009
                                                                                        • Owners of older cars best replacement prospects
                                                                                          • Figure 60: Year of main car and second car registration, by purchase intention, 2009
                                                                                      • Appendix – Used Car Ownership by Demographics

                                                                                          • Figure 61: Second-hand car ownership penetration – main car, by demographics, 2009
                                                                                          • Figure 62: Second-hand car ownership profile – main car, by demographics, 2009
                                                                                          • Figure 63: Second-hand car ownership penetration – second car, by demographics, 2009
                                                                                          • Figure 64: Second-hand car ownership profile – second car, by demographics, 2009
                                                                                          • Figure 65: Year of registration penetration – main car, by demographics, 2009
                                                                                          • Figure 66: Year of registration profile – main car, by demographics, 2009
                                                                                          • Figure 67: Year of registration profile – main car, by demographics, 2009
                                                                                          • Figure 68: Year of registration penetration – second car, by demographics, 2009
                                                                                          • Figure 69: Year of registration profile – second car, by demographics, 2009
                                                                                          • Figure 70: When obtained the car penetration – main car, by demographics, 2009
                                                                                          • Figure 71: When obtained the car profile – main car, by demographics, 2009
                                                                                          • Figure 72: When obtained the car penetration – second car, by demographics, 2009
                                                                                          • Figure 73: When obtained the car profile – second car, by demographics, 2009
                                                                                          • Figure 74: Engine size of the car penetration – main car, by demographics, 2009
                                                                                          • Figure 75: Engine size of the car profile – main car, by demographics, 2009
                                                                                          • Figure 76: Engine size of the car penetration – second car, by demographics, 2009
                                                                                          • Figure 77: Engine size of the car profile – second car, by demographics, 2009
                                                                                          • Figure 78: Type of fuel penetration – main car, by demographics, 2009
                                                                                          • Figure 79: Type of fuel profile – main car, by demographics, 2009
                                                                                          • Figure 80: Type of fuel penetration – second car, by demographics, 2009
                                                                                          • Figure 81: Type of fuel profile – second car, by demographics, 2009
                                                                                      • Appendix – Used Car Decision-making by Demographics

                                                                                          • Figure 82: Who decided on make and model penetration – main car, by demographics, 2009
                                                                                          • Figure 83: Who decided on make and model profile – main car, by demographics, 2009
                                                                                          • Figure 84: Who decided on make and model penetration – second car, by demographics, 2009
                                                                                          • Figure 85: Who decided on make and model profile – second car, by demographics, 2009
                                                                                          • Figure 86: Who paid for car penetration – main car, by demographics, 2009
                                                                                          • Figure 87: Who paid for car profile – main car, by demographics, 2009
                                                                                          • Figure 88: Who paid for car profile – second car, by demographics, 2009
                                                                                          • Figure 89: Who paid for car profile – second car, by demographics, 2009
                                                                                          • Figure 90: Part-exchanged previous car penetration – main car, by demographics, 2009
                                                                                          • Figure 91: Part-exchanged previous car profile – main car, by demographics, 2009
                                                                                          • Figure 92: Part-exchanged previous car penetration – second car, by demographics, 2009
                                                                                          • Figure 93: Part-exchanged previous car penetration – second car, by demographics, 2009
                                                                                      • Appendix – Car-buying Intentions by Demographics

                                                                                          • Figure 94: Intention to buy a second-hand car penetration, by demographics, 2009
                                                                                          • Figure 95: Intention to buy a second-hand car profile, by demographics, 2009

                                                                                      Companies Covered

                                                                                      • AB Volvo
                                                                                      • Advertising Standards Authority
                                                                                      • Alpina
                                                                                      • Arnold Clark Automobiles Ltd
                                                                                      • Aston Martin Lagonda Limited
                                                                                      • Audi United Kingdom
                                                                                      • Automobile Association (AA)
                                                                                      • Automobili Lamborghini Holding S.p.A.
                                                                                      • Bayerische Motoren Werke AG (BMW)
                                                                                      • Bentley Motors Limited
                                                                                      • Bristol Street Group Ltd
                                                                                      • British Car Auctions Ltd
                                                                                      • British Market Research Bureau (BMRB)
                                                                                      • Carcraft
                                                                                      • Carenquiry
                                                                                      • Cargiant
                                                                                      • CC Automotive Group Ltd
                                                                                      • Chrysler LLC
                                                                                      • Council of Mortgage Lenders
                                                                                      • Driver and Vehicle Licensing Agency
                                                                                      • Exchange & Mart
                                                                                      • Ferrari S.p.A.
                                                                                      • Fiat Auto
                                                                                      • Financial Services Authority (The)
                                                                                      • Ford Motor Company Limited (UK)
                                                                                      • Google UK
                                                                                      • Government Actuary's Department (GAD)
                                                                                      • Group Lotus Plc
                                                                                      • Hitwise Pty. Ltd.
                                                                                      • Honda Motor Co. Ltd (UK)
                                                                                      • Hyundai Car (UK) Ltd
                                                                                      • Inchcape Retail Ltd
                                                                                      • Jaguar Cars Limited
                                                                                      • Jardine Motor Group plc
                                                                                      • JCT600
                                                                                      • Kantar Media
                                                                                      • Kia Motors UK Ltd
                                                                                      • Land Rover UK
                                                                                      • Lookers plc
                                                                                      • Maranello Concessionaires Ltd (Maserati UK)
                                                                                      • Mazda Motors UK Ltd
                                                                                      • McLaren-Mercedes
                                                                                      • Mercedes-Benz UK
                                                                                      • Motorpoint
                                                                                      • Nissan Motor (GB) Ltd
                                                                                      • Office of Fair Trading
                                                                                      • Pendragon plc
                                                                                      • Penske Automotive Group, Inc.
                                                                                      • Peugeot Motor Company Plc
                                                                                      • Porsche Cars Great Britain Ltd
                                                                                      • Renault (UK) Ltd
                                                                                      • Rolls-Royce Motor Cars Ltd
                                                                                      • Saab Automobile AB
                                                                                      • SEAT SA
                                                                                      • Skoda Auto a.s.
                                                                                      • Society of Motor Manufacturers and Traders
                                                                                      • Subaru (UK) Ltd
                                                                                      • Suzuki GB PLC
                                                                                      • Sytner Group plc
                                                                                      • The Colt Car Company Ltd (Mitsubishi Motors UK)
                                                                                      • Toyota (GB) PLC
                                                                                      • Triumph Motorcycles Ltd
                                                                                      • UK Car Group
                                                                                      • United Auto Group, Inc.
                                                                                      • Vauxhall Motors Ltd
                                                                                      • Vertu Motors
                                                                                      • Volkswagen UK

                                                                                      Used Car Market - UK - July 2010

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