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Vehicle Recovery - UK - September 2016

This report will help you to uncover opportunities and understand the key issues affecting your market. How? By giving you instant access to analysis and critical recommendations. It will also challenge routine thinking by providing fresh, new perspectives that energizes your thought processes.

Mintel research sources can include exclusive consumer data, brand/company research and insights from key trade members. This means that we provide you with the complete picture and robust information you need to make the decisions to drive your business forward.

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 value of the vehicle recovery services market is made up of fees from memberships, paid either directly or indirectly, as well as revenue from the ad hoc sector.

Membership fees comprise any premiums paid to ensure that a vehicle or person is insured in the event of a breakdown. Fees can be paid either direct by the consumer to the recovery company or indirectly through an intermediary that will offer insurance to the consumer often as part of a bundle of services.

The value of the ad hoc sector is revenue from motorists who are not members of an organisation and therefore use the services of a recovery operator – normally an independent – on an informal or ad hoc basis.

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Table of contents

  1. Overview

    • What you need to know
      • Scope of this Report
      • Executive Summary

          • Revenues ahead as a result of a number of actions
            • Figure 1: The vehicle recovery market, by value, 2011-21
          • Price competition dents average premiums
            • Figure 2: Average premium paid, 2011-16
          • Growth in UK car parc acting as a major driver
            • Figure 3: Number of licensed cars (Great Britain), 1995-2015
          • Three companies account for 89% of all membership
            • Figure 4: Company shares of the vehicle recovery market, by UK membership, 2016
          • Free or reduced price insurance accounts for half of all sales
            • Figure 5: Key channels used for purchasing breakdown recovery insurance, 2012-16
          • AA scores strongest in terms of trust and differentiation
            • Figure 6: Attitudes towards and usage of selected brands, July 2016
          • Promotional activity falls back in 2015
            • Figure 7: Recorded above-the-line, online display and direct mail total advertising expenditure on vehicle recovery, 2012-15
          • Other organisations increasingly challenge the dominance of the big three
            • Figure 8: Ownership of breakdown cover, by recovery organisation, 2011-16
          • Sticking with an existing provider of recovery services is popular
            • Figure 9: How most recent recovery insurance was arranged, July 2016
          • Indirect channels are more important for purchasing
            • Figure 10: Key means by which current breakdown cover for your main vehicle was acquired, July 2016
          • Costs are important when it comes to owning recovery insurance
            • Figure 11: Attitudes towards vehicle recovery, July 2016
          • Vehicle owners split on the use of telematics
            • Figure 12: Interest in telematic policies, July 2016
          • What we think
          • Issues and Insights

            • Solutions required to overcome pressure to compete on price
              • The facts
                • The implications
                  • Broadening your customer base is essential
                    • The facts
                      • The implications
                        • Is telematics the future?
                          • The facts
                            • The implications
                            • The Market – What You Need to Know

                              • Revenue growth remains strong…
                                • ...although average premiums paid have changed little
                                  • The UK’s growing car parc is a significant driver
                                    • Regular memberships dominate although are failing to make further progress
                                      • Personal mobility appears to be falling
                                        • Free or bundled sales dominate the market
                                        • Market Size and Forecast

                                          • Recovery services market records steady growth
                                            • Figure 13: UK vehicle recovery market, by value, at current and constant prices, 2011-21
                                            • Figure 14: Best- and worst-case forecasts of vehicle recovery market, by value, 2011-21
                                          • Forecast methodology
                                            • The impact of the EU referendum vote
                                              • Clothing spend has been resilient in previous slowdowns
                                                • Figure 15: Alternative market scenarios for the post-Brexit women’s outerwear market, at current prices, 2016-21
                                                • Figure 16: Detailed Post-Brexit scenarios for the vehicle recovery market, at current prices, 2016-21
                                              • Factors other than Brexit will impact on demand for vehicle recovery services
                                              • Market Segmentation

                                                • Regular membership up but failing to push on
                                                  • Figure 17: Segmentation of the vehicle recovery market, by value, at current prices, 2011-16
                                                • Prices paid show evidence of stagnation
                                                  • Figure 18: Average premium paid, 2011-16
                                                • Role of free and bundled sales
                                                • Market Drivers

                                                  • Demand for new and used cars records strong growth…
                                                    • Figure 19: New and used car market volumes, 2010-16
                                                  • …resulting in further growth in the size of the UK car parc
                                                    • Figure 20: Number of licensed cars (Great Britain), 1995-2015
                                                  • Expansion in car sales has little impact on multi-car ownership
                                                    • Figure 21: Percentage of households with car availability, in England, 2004-14
                                                  • Personal mobility is in decline
                                                    • Figure 22: Trips, distance travelled and time taken (England), 2005-14
                                                  • Falling motoring expenses benefit those with a vehicle
                                                    • Figure 23: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2011-15
                                                  • Fuel prices are down overall although with evidence of an upward move
                                                    • Figure 24: Typical retail prices of petroleum products in the UK, July 2013-June 2016
                                                  • Second-hand cars benefit from falling prices
                                                    • Figure 25: Price indices of new and used cars, 2002-14
                                                  • UK population both growing and ageing
                                                    • Figure 26: Trends in the age structure of the UK population, 2011-21
                                                  • What next after Brexit?
                                                  • Channels to Market

                                                    • Half of those with vehicle recovery insurance got it free or at a reduced price
                                                      • Other channels are of variable importance
                                                        • Figure 27: Key channels used for purchasing breakdown recovery insurance, 2012-16
                                                    • Companies and Brands – What You Need to Know

                                                      • Membership exceeds 29 million
                                                        • AA, RAC and Green Flag dominate the membership market
                                                          • AA is the strongest-performing brand
                                                            • Price is a key competitive factor with service bundling used to help minimise its impact
                                                              • Technology comes to the rescue
                                                                • Advertising spend goes into reverse
                                                                • Competitive Strategies

                                                                  • Differentiation through service offered
                                                                    • Price as a competitive factor
                                                                        • Figure 28: Prices of breakdown recovery products for the AA, RAC, Green Flag and LV=, 2012-16
                                                                      • Upfront payment versus claim back
                                                                        • Use of offers to entice sales
                                                                          • Partnerships
                                                                            • Retailers
                                                                              • Financial institutions
                                                                                • Figure 29: Packaged current accounts that offer breakdown cover, 2016
                                                                              • Vehicle manufacturers
                                                                                • Figure 30: Car manufacturer-branded breakdown cover on new purchases, 2016
                                                                            • Market Share

                                                                              • UK market dominated by three large players
                                                                                • Vehicle recovery membership surpasses 29 million
                                                                                  • Figure 31: Company shares of the vehicle recovery market, by UK membership, 2010-16
                                                                              • Advertising and Marketing Activity

                                                                                • Advertising spend falls back after 2013 peak
                                                                                  • Figure 32: Total above-the-line, online display and direct mail advertising expenditure on breakdown recovery, 2012-15
                                                                                • Seasonal variation in sector advertising expenditure
                                                                                  • Figure 33: Recorded above-the-line, online display and direct mail total advertising expenditure on breakdown recovery, by month, 2015
                                                                                • UKI, RAC and the AA dominate sector advertising spend
                                                                                  • Figure 34: Recorded above-the-line, online display and direct mail total advertising expenditure on breakdown recovery, by advertiser, 2012-15
                                                                                • Direct mail leads as the most important channel
                                                                                  • Figure 35: Recorded above-the-line, online display and direct mail total advertising expenditure on breakdown recovery, by media type, 2012-15
                                                                                • A note on adspend
                                                                                • Brand Research

                                                                                    • Brand map: AA scores well in both differentiation and trust
                                                                                        • Figure 36: Attitudes towards and usage of selected brands, July 2016
                                                                                      • Key brand metrics: AA strength comes from past consumer experience
                                                                                        • Figure 37: Key metrics for selected brands, July 2016
                                                                                      • Brand attitudes: AA and RAC well positioned on non-price factors
                                                                                        • Figure 38: Attitudes, by brand, July 2016
                                                                                      • Brand personality: Each of the big three players has a distinct personality
                                                                                        • Figure 39: Brand personality – Macro image, July 2016
                                                                                      • Brand personality: AA wins when it comes to brand micro factors
                                                                                        • Figure 40: Brand personality – Micro image, July 2016
                                                                                      • Brand analysis
                                                                                        • The AA attracts men and those in wealthier socio-economic groups
                                                                                          • Figure 41: User profile of AA, July 2016
                                                                                        • RAC has strengths with older adults and especially older women
                                                                                          • Figure 42: User profile of RAC, July 2016
                                                                                        • Green Flag has strengths with wealthier socio-economic groups and families
                                                                                          • Figure 43: User profile of Green Flag, July 2016
                                                                                      • Launch Activity and Innovation

                                                                                        • Gadget to remotely identify potential breakdowns before they happen
                                                                                          • AA launches insurance company
                                                                                            • Complimentary roadside assistance for VW campervans
                                                                                              • ‘UK’s most comprehensive European breakdown cover’
                                                                                                • New telematics driver app for business drivers
                                                                                                  • Smart Driver Club’s telematics-based insurance product with breakdown recovery support
                                                                                                  • The Consumer – What You Need to Know

                                                                                                    • Big three companies dominate the market
                                                                                                      • Existing companies are well placed to continue to dominate the market
                                                                                                        • Buying recovery insurance as part of vehicle insurance accounts for around a quarter of purchases
                                                                                                          • Money-saving actions are of most interest to policyholders
                                                                                                            • Broad split of interest in telematics policies
                                                                                                            • Presence of Recovery Organisations

                                                                                                              • AA dominates the market
                                                                                                                • Figure 44: Ownership of breakdown cover, by recovery organisation, June 2016
                                                                                                              • AA and RAC attract different groups of customers
                                                                                                                • Wealthy car owners are more likely to look beyond big three
                                                                                                                  • Other organisations appear to be growing their share of memberships
                                                                                                                    • Figure 45: Ownership of breakdown cover, by recovery organisation, 2011-16
                                                                                                                  • Middle-aged adults, less wealthy and Scots least likely to have cover
                                                                                                                    • Individual companies have specific strengths within the market
                                                                                                                    • Renewal Strategies

                                                                                                                      • Significant minority renew with their existing company
                                                                                                                        • Figure 46: How most recent recovery insurance was arranged, June 2016
                                                                                                                      • Older adults appear reluctant to change
                                                                                                                        • ABC1s are open to new ideas
                                                                                                                          • Online purchasers are more likely to shop around or move company
                                                                                                                          • Where Cover is Acquired

                                                                                                                            • Around a quarter of policies are purchased alongside vehicle insurance
                                                                                                                              • Figure 47: Key means by which current breakdown cover for your main vehicle was acquired, June 2016
                                                                                                                            • Young and old adults acquire insurance in different ways
                                                                                                                              • Socio-economic background also influences purchase practice
                                                                                                                                • Dealers and internet comparison sites are growing in importance
                                                                                                                                  • Figure 48: Key means by which your current breakdown cover for your main vehicle was acquired, 2011-16
                                                                                                                                • New vehicle owners are likely to have insurance from a dealer/garage
                                                                                                                                  • Green Flag sees the use of different channels compared to AA and RAC
                                                                                                                                  • Attitudes towards Vehicle Recovery Insurance

                                                                                                                                    • Ways of keeping down costs are of most interest to policyholders
                                                                                                                                      • Figure 49: Attitudes towards vehicle recovery, June 2016
                                                                                                                                    • Young adults interested in short-term policies
                                                                                                                                      • Urban drivers want other services and lower premiums for newer vehicles
                                                                                                                                        • Discounts and technology separate different socio-economic groups
                                                                                                                                          • Drivers of vehicles other than cars want other services
                                                                                                                                            • Those acquiring policies from garages or dealers want lower premiums
                                                                                                                                              • Attitudes towards vehicle recovery insurance – CHAID analysis
                                                                                                                                                • Methodology
                                                                                                                                                  • Older buyers who buy direct are a target group for discounts
                                                                                                                                                    • Figure 50: Vehicle recovery – CHAID – Tree output, July 2016
                                                                                                                                                    • Figure 51: Vehicle recovery – CHAID – Table output, July 2016
                                                                                                                                                • Interest in Telematic Vehicle Recovery Policies

                                                                                                                                                  • Broad split in terms of interest in telematics
                                                                                                                                                    • Figure 52: Interest in telematic policies, June 2016
                                                                                                                                                  • Young, male and urban drivers show strongest interest in telematics…
                                                                                                                                                    • …while those in lower socio-economic groups are the least positive
                                                                                                                                                      • Women appear to have greatest uncertainty
                                                                                                                                                        • Owners of vehicles other than cars record high level of interest
                                                                                                                                                        • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                            • Abbreviations
                                                                                                                                                              • Consumer research methodology
                                                                                                                                                              • Appendix – Market Size and Forecast

                                                                                                                                                                • Data Sources
                                                                                                                                                                  • Market sizing and segment performance
                                                                                                                                                                    • Forecast methodology
                                                                                                                                                                      • Forecast data
                                                                                                                                                                        • Figure 53: Forecast of UK vehicle recovery market (value) – Best- and worst-case scenarios, 2016-21

                                                                                                                                                                    Companies Covered

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

                                                                                                                                                                    Vehicle Recovery - UK - September 2016

                                                                                                                                                                    £1,995.00 (Excl.Tax)