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Vehicle Recovery - UK - September 2010

This report covers vehicle breakdown recovery services available to private car owners, whether on a direct or indirect basis, as is common in the marketplace.

  • The Vehicle Recovery Services market is largely an intermediary market with nearly three quarters of all vehicle owners purchasing or acquiring their breakdown cover through their car insurer, bank, car dealer or other intermediary.
  • Nearly one third of all vehicle owners at 32% bought or acquired their breakdown cover as part of their motor insurance policy so the insurance renewal period is a key period for influencing vehicle owners’ renewal of breakdown cover.
  • Of the 28% of vehicle owners who purchased breakdown cover direct, half was purchased over the internet including 11% purchasing via a price comparison website. Internet marketing will grow in importance as a distribution channel for the marketing of breakdown cover.
  • The long term development of electric vehicle technology may result in an increase in vehicle leasing rather than outright purchase. The provision of breakdown cover may shift to becoming almost entirely an original equipment supplied product rather than an aftermarket renewal product.
  • Higher car operating costs such as maintenance and fuel are encouraging vehicle owners to seek lower costs in other discretionary areas of vehicle operating cost expenditure. Breakdown cover is a discretionary area of spend, and has felt the impact of consumers seeking lower-cost alternatives.
  • Recovery services companies need to develop customer relationship strategies that enable a dialogue to begin with the customer as soon as they become members of a breakdown service. This is key to enhancing the experience of the brand and is significant in influencing the member’s brand loyalty at renewal.

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Table of contents

  1. Issues in the Market

      • Key issues
        • Definition
          • Abbreviations
          • Future Opportunities

            • New types of cars and new types of ownership
              • Customer retention through experience
              • Market in Brief

                • Car sales hit by recession
                  • Costs of vehicle ownership rise
                    • Spending on membership falls
                      • Larger companies pursue affinity marketing opportunities
                        • Breakdown cover largely an intermediary market
                        • Internal Market Environment

                          • Key points
                            • Car parc falls for first time since Second World War
                              • Figure 1: UK car parc and new car registrations, 2003-09
                            • Decline in households owning two cars
                              • Figure 2: Household ownership of cars in the UK, 2004-09
                            • Consumer expenditure on personal transport
                              • Figure 3: Consumer expenditure on personal transport compared to total consumer spending, 2004-10
                            • New and second-hand car sales trends
                              • Figure 4: Private new car registrations and used car sales, 2004-09
                            • Impact of the scrappage scheme
                              • Car driving licence holding grows among older age groups
                                • Figure 5: Number of licence holders, by age, 1975/76-2009
                              • Reasons for usage of vehicle recovery services
                                • Figure 6: Most common types of call-out, 2010
                            • Broader Market Environment

                              • Key points
                                • Risk of a double-dip recession?
                                  • Figure 7: GDP quarterly percentage change, Q2 2004-Q2 2010
                                • A higher sustained rate of unemployment
                                  • Figure 8: Employment and unemployment, by gender, 2005-15
                                • Consumer spending set to recover
                                  • Figure 9: GDP, PDI, consumer expenditure and savings, at current prices, 2005-15
                                • Debt-constrained affluence
                                  • Figure 10: Forecast adult population trends, by socio-economic group, 2005-15
                                • Young families are a growth opportunity
                                  • Figure 11: Trends in the age structure of the UK population, 2005-15
                                • Third age and retired lifestage opportunities
                                  • Figure 12: Forecast adult population trends, by lifestage, 2005-15
                                • Smaller households and smaller cars?
                                  • Figure 13: UK households, by size, 2005-15
                                • Rising internet penetration
                                  • Figure 14: Broadband penetration, 2004-09
                              • Competitive Context

                                • Key points
                                  • Spending on personal transport
                                    • Figure 15: Spending on personal transport, at current prices, 2009
                                  • Car ownership becoming more expensive
                                    • Figure 16: Annual percentage change in transport costs, 2000-09
                                    • Figure 17: Price indices of new and used cars, 2000-09
                                  • Maintenance and fuel costs rising
                                    • Figure 18: Indices of personal transport prices, 2005-09
                                    • Figure 19: Trend in petrol and diesel pump prices, July 2000-July 2009
                                  • Car owners using their cars less….
                                    • Figure 20: UK car parc and total kilometres driven, 2003-09
                                  • ...but going on holiday in the UK more
                                    • Figure 21: Domestic and overseas holidays and expenditure, 2004-14
                                • Strengths and Weaknesses in the Market

                                    • Weaknesses
                                    • Who’s Innovating?

                                      • Key points
                                        • Green Flag launches iPhone app
                                          • Total offers free breakdown cover
                                            • Co-operative Insurance offers breakdown cover
                                              • Saga launches breakdown repair protection
                                                • TomTom launches breakdown service
                                                • Market Size and Forecast

                                                  • Key points
                                                    • Market recovers from recession
                                                      • Figure 22: UK vehicle recovery market, by value, 2005-15
                                                    • Forecast
                                                      • Factors used in the forecast
                                                      • Segment Performance

                                                        • Key points
                                                          • Organisation membership suffers in the recession
                                                            • Figure 23: Segmentation of the vehicle recovery market, by value, at current prices, 2005-10
                                                        • Market Share

                                                          • Key points
                                                            • Companies maintain market share
                                                              • Figure 24: Company shares of the vehicle recovery market, by UK membership*, 2006-10
                                                            • Recovery services pricing
                                                              • Figure 25: Prices of breakdown recovery products for the AA, RAC and Green Flag, September 2010
                                                            • Online and voucher discounts
                                                            • Companies and Products

                                                              • Major players
                                                                • The AA
                                                                    • Figure 26: Key financials of The Automobile Association Limited, 2007/08 and 2008/09
                                                                  • RAC
                                                                      • Figure 27: Key financials of RAC Motoring Services, 2008 and 2009
                                                                    • Green Flag
                                                                        • Figure 28: Key financials of Green Flag Limited, 2008 and 2009
                                                                      • Britannia Rescue
                                                                        • Mondial Assistance
                                                                            • Figure 29: Key financials of Mondial Assistance UK Limited, 2008 and 2009
                                                                          • Other companies and brands
                                                                            • Own-label breakdown cover
                                                                              • Car Manufacturer-branded Breakdown Cover
                                                                                • Figure 30: Car manufacturer-branded breakdown cover on new car purchases
                                                                              • Affinity marketing
                                                                              • Brand Communication and Promotion

                                                                                • Key points
                                                                                  • Adspend begins to recover
                                                                                    • Figure 31: UK main monitored media advertising expenditure on vehicle breakdown and recovery services, 2005-10
                                                                                  • Direct mail takes over from TV
                                                                                    • Figure 32: Vehicle recovery advertisers spend, by media type, 2005-09 (ranked by last full year, 2009)
                                                                                    • Figure 33: Proportion of vehicle recovery adspend, by media type, 2005 and 2009
                                                                                  • AA and RAC dominate adspend
                                                                                    • Figure 34: Vehicle recovery adspend – top 20 advertisers, 2005-09 (ranked by cumulative total, 2009)
                                                                                • Channels to Market

                                                                                  • Key points
                                                                                    • An intermediary market
                                                                                      • Internet distribution and web aggregators
                                                                                        • Aggregators achieve 40% penetration
                                                                                          • Figure 35: Usage of price-comparison sites among aggregator adopters, September 2009
                                                                                        • Loyalty a rare commodity
                                                                                          • Figure 36: Usage of price-comparison websites, by number of price-comparison websites used to obtain quotes/compare prices or to buy financial products, September 2009
                                                                                        • Aggregator users focus on price
                                                                                          • Figure 37: Most important considerations when using price-comparison sites, September 2009
                                                                                      • The Consumer – Vehicle Ownership

                                                                                        • Key points
                                                                                          • Types of vehicle owned
                                                                                              • Figure 38: Types of vehicle owned, June 2010
                                                                                            • Different vehicle demographic characteristics
                                                                                            • The Consumer – Breakdown Cover Brand Awareness and Penetration

                                                                                              • Key points
                                                                                                  • Figure 39: Statements on breakdown cover, June 2010
                                                                                                • Younger car owners least likely to have breakdown cover
                                                                                                  • Older age groups most likely to have cover
                                                                                                    • AA and Green Flag more upmarket?
                                                                                                      • AA and RAC stronger among new car owners
                                                                                                        • Figure 40: Statements on breakdown cover, by ownership of new or used car/van*, June 2010
                                                                                                      • Younger families less likely to have breakdown cover
                                                                                                      • The Consumer – How Cover Was Acquired

                                                                                                        • Key points
                                                                                                            • Figure 41: How breakdown cover was acquired, June 2010
                                                                                                          • Breakdown cover mainly an intermediary market
                                                                                                            • Figure 42: Direct or intermediary purchasing of breakdown cover*, June 2010
                                                                                                          • Smaller recovery companies more likely to sell through intermediaries
                                                                                                            • Figure 43: Statements on breakdown cover, by how breakdown cover was acquired, June 2010
                                                                                                        • Appendix – Vehicle Ownership

                                                                                                            • Figure 44: Most popular ownership of vehicle, by demographics, June 2010
                                                                                                        • Appendix – Breakdown Cover Brand Awareness and Penetration

                                                                                                            • Figure 45: Most popular statements on breakdown cover, by demographics, June 2010
                                                                                                            • Figure 46: Next most popular statements on breakdown cover, by demographics, June 2010
                                                                                                        • Appendix – How Cover Was Acquired

                                                                                                            • Figure 47: Most popular how breakdown cover was acquired, by demographics, June 2010

                                                                                                        Companies Covered

                                                                                                        • AB Volvo
                                                                                                        • Acromas Holdings
                                                                                                        • Aldi Stores Ltd (UK & Ireland)
                                                                                                        • Allianz Group
                                                                                                        • Apple Computer UK Ltd
                                                                                                        • Asda Group Ltd
                                                                                                        • Audi United Kingdom
                                                                                                        • Automobile Association (AA)
                                                                                                        • Aviva Plc
                                                                                                        • AXA UK plc
                                                                                                        • Bayerische Motoren Werke AG (BMW)
                                                                                                        • BMW (GB) Ltd
                                                                                                        • Britannia Rescue
                                                                                                        • British Bobsleigh Association
                                                                                                        • British Market Research Bureau (BMRB)
                                                                                                        • Churchill Insurance
                                                                                                        • Civil Service Motoring Association Ltd (CSMA)
                                                                                                        • Co-operative Group
                                                                                                        • Council of Mortgage Lenders
                                                                                                        • Direct Line Group Limited
                                                                                                        • Equity Insurance Group Limited
                                                                                                        • Equity Red Star
                                                                                                        • Europ Assistance UK
                                                                                                        • Formula One Administration Ltd
                                                                                                        • Government Actuary's Department (GAD)
                                                                                                        • Green Flag Motoring Assistance
                                                                                                        • Guild of Experienced Motorists (GEM)
                                                                                                        • Honda Motor Co. Ltd (UK)
                                                                                                        • Institute of Customer Service
                                                                                                        • J. Sainsbury
                                                                                                        • Jaguar Cars Limited
                                                                                                        • Kantar Media
                                                                                                        • Land Rover UK
                                                                                                        • Lex Vehicle Finance Limited
                                                                                                        • Lidl (UK)
                                                                                                        • Liverpool Victoria Friendly Society Limited
                                                                                                        • Lloyds Banking Group
                                                                                                        • LV=
                                                                                                        • Marks & Spencer
                                                                                                        • Mazda Motors UK Ltd
                                                                                                        • Mercedes-Benz UK
                                                                                                        • Mondial Assistance (UK) Limited
                                                                                                        • Mondial Assistance Group
                                                                                                        • National Union of Teachers
                                                                                                        • NCI Vehicle Rescue plc
                                                                                                        • Netto Foodstores Ltd
                                                                                                        • Norwich Union
                                                                                                        • Royal Automobile Club
                                                                                                        • Royal Bank of Scotland Group plc
                                                                                                        • Saga Group
                                                                                                        • Saga Services (finance)
                                                                                                        • Society of Motor Manufacturers and Traders
                                                                                                        • Tesco Plc
                                                                                                        • TomTom International B.V.
                                                                                                        • Toyota (GB) PLC
                                                                                                        • UKI Partnerships
                                                                                                        • Wm Morrison Supermarkets

                                                                                                        Vehicle Recovery - UK - September 2010

                                                                                                        £1,995.00 (Excl.Tax)