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Vehicle Recovery - UK - December 2011

“The growth in online purchasing of breakdown cover reflects the changing way that many consumers are purchasing all types of goods and services. The fact that vehicle recovery is viewed by many as a ‘must have’, but with very little differentiation between one company and another, means price is an important factor. For the operators, keeping costs low is likely to be uppermost in what is a highly competitive market, thus necessitating a strong online presence.”

– Michelle Strutton, Senior Consumer Analyst

Some questions answered in this report include:

  • What has been the impact of the recession on the demand for vehicle recovery services?
  • What factors have the biggest influence on whether a vehicle owner chooses to have recovery insurance?
  • What would encourage those who do not currently have vehicle recovery insurance to purchase it?
  • What has been the impact of the internet on both direct sales and sales via intermediaries?

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: Best- and worst-case forecast value of the vehicle recovery market, 2006-16
            • Market background
              • Companies
                • Figure 2: Membership numbers (million), by company, 2011
              • The retail environment
                • The consumer
                  • Small but rising proportion of consumers are not renewing their breakdown cover
                    • Figure 3: Vehicle breakdown owners, percentage by age, September 2011
                  • Offering peace of mind
                    • Figure 4: Growth in online acquisition of breakdown cover, 2010 and 2011
                    • Figure 5: Online acquisition of breakdown cover, by age, September 2011
                • Issues in the Market

                    • What has been the impact of the recession on the demand for vehicle recovery services?
                      • What factors have the biggest influence on whether a vehicle owner chooses to have recovery insurance?
                        • What would encourage those who do not currently have vehicle recovery insurance to purchase it?
                          • What has been the impact of the internet on both direct sales and sales via intermediaries?
                          • Future Opportunities

                              • Trend: Let’s make a Deal
                                • Trend: Carnivore, Herbivore, Locavore
                                • Internal Market Environment

                                  • Key points
                                    • New car market shows signs of stagnation...
                                      • Figure 6: Total new car registrations, by private, fleet and business sales, 2006-11
                                    • ...although growing multiple car ownership continues
                                      • Figure 7: Number of cars owned by individual households, 1985/86-2008
                                    • Growth in expenditure on transport continues
                                      • Figure 8: Consumer expenditure on personal transport compared to total consumer spending, 2006-10
                                    • Older drivers growing in importance
                                      • Figure 9: Driving licence holders, % by age group, 1975/76-2010
                                    • Battery problems are the most common reason for a call out
                                      • Figure 10: Most common types of call-out, 2011
                                  • Broader Market Environment

                                    • Key points
                                      • What recovery?
                                        • Figure 11: GDP quarterly percentage change, Q1 2004-Q2 2011
                                      • ABC1s increasingly dominate
                                        • Figure 12: Forecast adult population trends, by socio-economic group, 2006-16
                                      • Both young families and older drivers set to bring opportunities
                                        • Figure 13: Trends in the age structure of the UK population, 2006-16
                                      • Retired adults set to grow strongly
                                        • Figure 14: Forecast adult population trends, by lifestage, 2006-16
                                      • Growing number of one-person households set to continue
                                        • Figure 15: UK households, by size, 2006-16
                                      • Internet ready to play a growing role in purchasing
                                        • Figure 16: Broadband penetration, 2005-10
                                    • Competitive Context

                                      • Key points
                                        • Costs for running a car spiral upwards
                                          • Figure 17: Spending on personal transport, at current prices, 2000 and 2010
                                        • Price of fuel reaching a new high
                                          • Figure 18: Escalation of price of motor fuel in recent years, pence per litre, January 2009-May 2011
                                        • Car mileage is in decline
                                          • Figure 19: Road traffic (billion vehicle miles) in Great Britain, by vehicle type, 1980-2010
                                      • Strengths and Weaknesses

                                        • Strengths
                                          • Weaknesses
                                          • Who’s Innovating?

                                            • Key points
                                              • Evolution as opposed to revolution
                                                • Interest in apps grows
                                                  • Vehicle owners’ club launches service for older cars
                                                    • Breakdown recovery for Christmas?
                                                      • Offers moving into the coupon market
                                                        • Pay-As-You-Go recovery launches in the UK
                                                        • Market Size and Forecast

                                                          • Key points
                                                            • Recovery services market continues to recover from recent recession
                                                              • Figure 20: UK vehicle recovery market*, by value, at current prices, 2006-16
                                                            • The future
                                                              • Forecast
                                                                • Figure 21: Best- and worst-case forecast value of the vehicle recovery market, 2006-16
                                                                • Figure 22: Best- and worst-case forecast value of organisation membership, 2006-16
                                                                • Figure 23: Best- and worst-case value of ad hoc revenues, 2006-16
                                                            • Segment Performance

                                                              • Key points
                                                                • Membership is most important to the market
                                                                  • Figure 24: Segmentation of the vehicle recovery market, by value, at current prices, 2006-16
                                                                • Membership remains important although value has been under pressure
                                                                  • Ad hoc membership sales remain steady
                                                                  • Market Share

                                                                    • Key points
                                                                      • Membership numbers record small decline
                                                                        • Figure 25: Company shares of the vehicle recovery market, by UK membership*, 2006-11
                                                                      • Green Flag’s policy of competitive pricing evident amongst big three
                                                                        • Figure 26: Prices of breakdown recovery products for the AA, RAC and Green Flag, October 2011
                                                                      • Online discounts and vouchers
                                                                      • Companies and Products

                                                                        • Key points
                                                                          • The big three
                                                                            • The AA (Automobile Association)
                                                                                • Figure 27: Key financials for The Automobile Association Ltd, 2009-10 
                                                                              • RAC
                                                                                  • Figure 28: Key financials for RAC Motoring Services Ltd, 2009-10 
                                                                                • Green Flag
                                                                                    • Figure 29: Key financials for Green Flag Ltd, 2009-10
                                                                                  • Other companies
                                                                                    • Britannia Rescue
                                                                                      • Mondial Assistance
                                                                                          • Figure 30: Key financials of Mondial Assistance (UK) Ltd, 2009-10
                                                                                        • Rescuemycar.com
                                                                                          • Autonational Rescue
                                                                                            • GEM Motoring Assist
                                                                                              • First Call GB Ltd
                                                                                                • Breakdown Direct
                                                                                                  • Europ Assistance
                                                                                                    • AXA Assistance
                                                                                                      • Supermarket-branded breakdown cover
                                                                                                        • Car manufacturer-branded breakdown cover
                                                                                                          • Figure 31: Car manufacturer-branded breakdown cover on new car purchases, 2011
                                                                                                      • Brand Communication and Promotion

                                                                                                        • Key points
                                                                                                          • Advertising support is on the up
                                                                                                            • Figure 32: UK main media advertising expenditure on vehicle breakdown and recovery services, 2007-11*
                                                                                                          • Direct mail dominates while other channels suffer mixed fortunes
                                                                                                            • Figure 33: Main media advertising expenditure on vehicle breakdown and recovery services, % share by media type, 2007-11
                                                                                                          • RAC leads overall expenditure
                                                                                                            • Figure 34: Main media advertising expenditure on vehicle breakdown and recovery services, by advertiser, 2007-11
                                                                                                        • Channels to Market

                                                                                                          • Key points
                                                                                                            • Intermediaries account for 60% of breakdown recovery sales
                                                                                                              • Bundling is an important way to purchase from a third party
                                                                                                                • Purchasing from aggregator websites remains low
                                                                                                                  • Use of price comparison sites for searches is high
                                                                                                                    • Figure 35: Choice of financial information sites, April 2011
                                                                                                                  • Loyalty remains in short supply
                                                                                                                    • Figure 36: Choice of financial information sites, by number of products bought through aggregators, April 2011
                                                                                                                  • Accuracy crucial when using price comparison sites
                                                                                                                    • Figure 37: Most important factors when using price-comparison sites to compare prices/obtain quotes or purchase financial products, August 2010
                                                                                                                • The Consumer – Vehicle Ownership

                                                                                                                  • Key points
                                                                                                                    • Cars dominate vehicle ownership
                                                                                                                        • Figure 38: Type of vehicle owned, September 2011
                                                                                                                      • Males, young and elderly adults and families most likely to buy new
                                                                                                                        • Social grade tends to affect the purchase of new cars
                                                                                                                        • The Consumer – Ownership of Breakdown Cover

                                                                                                                          • Key points
                                                                                                                            • Four fifths of drivers have breakdown cover
                                                                                                                                • Figure 39: Ownership of breakdown cover, September 2011
                                                                                                                              • Older drivers are more likely to hold cover…
                                                                                                                                • ... as are those in the highest socio-economic group AB
                                                                                                                                  • Lapsed users polarised towards 35-44 age band
                                                                                                                                    • AA growing market share
                                                                                                                                      • Figure 40: Ownership of breakdown cover, by recovery organisation, 2010 and 2011
                                                                                                                                    • AA and RAC record greatest strengths amongst new car owners
                                                                                                                                      • Figure 41: Ownership of breakdown cover, by type of vehicle owned, September 2011
                                                                                                                                  • The Consumer – How Cover is Acquired

                                                                                                                                    • Key points
                                                                                                                                      • Consumers purchase insurance from various sources
                                                                                                                                          • Figure 42: How breakdown cover was acquired, September 2011
                                                                                                                                        • Age plays some role in how breakdown cover purchased
                                                                                                                                          • Low income drivers more likely to purchase cover alongside car insurance
                                                                                                                                            • Purchases online from company websites are on the up
                                                                                                                                              • Figure 43: How breakdown cover was acquired, 2010 and 2011
                                                                                                                                            • Smaller recovery providers have strengths in specific channels
                                                                                                                                              • Figure 44: How breakdown cover was acquired, by ownership of breakdown cover, September 2011
                                                                                                                                          • The Consumer – Attitudes Towards Breakdown Recovery Services

                                                                                                                                            • Key points
                                                                                                                                              • Peace of mind and lack of loyalty dominates consumer thinking
                                                                                                                                                  • Figure 45: Attitudes towards breakdown recovery services, September 2011
                                                                                                                                                • Peace of mind important to some
                                                                                                                                                  • Young drivers open to influence
                                                                                                                                                    • Loyalty more evident with AA and RAC members
                                                                                                                                                      • Figure 46: Attitudes towards breakdown recovery services, by ownership of breakdown cover, September 2011
                                                                                                                                                    • Used car drivers are more likely to switch on grounds of cost
                                                                                                                                                      • Figure 47: Attitudes towards breakdown recovery services, by type of vehicle owned, September 2011
                                                                                                                                                  • Consumer - Reasons For Not Owning Breakdown Cover

                                                                                                                                                    • Key points
                                                                                                                                                      • Cost is a major reason why breakdown cover is not held
                                                                                                                                                          • Figure 48: Reasons for not owning breakdown cover, September 2011
                                                                                                                                                        • Wealthier owners and men appear to find expense of cover a bigger issue
                                                                                                                                                          • Owners of new and used cars have different views
                                                                                                                                                            • Figure 49: Reasons for not owning breakdown cover, by type of vehicle owned, September 2011
                                                                                                                                                          • More potential to include breakdown cover with car insurance
                                                                                                                                                              • Figure 50: Incentives for taking out breakdown cover, September 2011
                                                                                                                                                            • Young are most likely to be attracted by incentives
                                                                                                                                                              • Including breakdown insurance with car insurance is seen as a popular incentive
                                                                                                                                                                • Figure 51: Incentives for taking out breakdown cover, by type of vehicle owned, September 2011
                                                                                                                                                            • Appendix – Market Size and Forecast

                                                                                                                                                                • Figure 52: Best-case and worst-case value of the vehicle recovery market, 2009-16
                                                                                                                                                            • Appendix – Vehicle Ownership

                                                                                                                                                                • Figure 53: Type of vehicle owned, by demographics, September 2011
                                                                                                                                                            • Appendix – Ownership of Breakdown Cover

                                                                                                                                                                • Figure 54: Most popular ownership of breakdown cover, by demographics, September 2011
                                                                                                                                                                • Figure 55: Next most popular ownership of breakdown cover, by demographics, September 2011
                                                                                                                                                            • Appendix – How Cover is Acquired

                                                                                                                                                                • Figure 56: How breakdown cover was acquired, by demographics, September 2011
                                                                                                                                                            • Appendix – Attitudes Towards Breakdown Recovery Services

                                                                                                                                                                • Figure 57: Most popular attitudes towards breakdown recovery services, by demographics, September 2011
                                                                                                                                                                • Figure 58: Next most popular attitudes towards breakdown recovery services, by demographics, September 2011
                                                                                                                                                            • Appendix – Reasons for Not Owning Breakdown Cover

                                                                                                                                                                • Figure 59: Reasons for not owning breakdown cover, by demographics, September 2011
                                                                                                                                                                • Figure 60: Incentives for taking out breakdown cover, by demographics, September 2011

                                                                                                                                                            Companies Covered

                                                                                                                                                            • Allianz Group
                                                                                                                                                            • Audi United Kingdom
                                                                                                                                                            • Automobile Association (AA)
                                                                                                                                                            • Aviva Plc
                                                                                                                                                            • AXA UK plc
                                                                                                                                                            • Britannia Rescue
                                                                                                                                                            • Carlyle Group (The)
                                                                                                                                                            • Civil Service Motoring Association Ltd (CSMA)
                                                                                                                                                            • Europ Assistance UK
                                                                                                                                                            • Green Flag Motoring Assistance
                                                                                                                                                            • Jaguar Cars Limited
                                                                                                                                                            • Land Rover UK
                                                                                                                                                            • Liverpool Victoria Friendly Society Limited
                                                                                                                                                            • LV=
                                                                                                                                                            • Mercedes-Benz UK
                                                                                                                                                            • Mondial Assistance (UK) Limited
                                                                                                                                                            • Mondial Assistance Group
                                                                                                                                                            • Royal Automobile Club
                                                                                                                                                            • Trinity Mirror plc
                                                                                                                                                            • Volkswagen AG

                                                                                                                                                            Vehicle Recovery - UK - December 2011

                                                                                                                                                            £1,750.00 (Excl.Tax)