Car Aftermarket - UK - November 2015

automotive

“The parts replacement market has seen sluggish growth in recent years despite the fact that certain sectors such as tyres have seen prices boosted by rising raw material costs. A combination of factors ranging from increased reliability to the effects of lower prices and down-trading have come together to depress revenue growth in particular. This is despite the fact that vehicles aged 12 years and over are estimated to account for 21.7% of the UK car parc in 2014.”
– Neil Mason, Head of Retail Research

This report discusses the following key topics:

How to boost revenues
Overcoming the threat from low-priced competition
Communicating with the motorist

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Consumer Attitudes and Behaviour
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Overview
- What you need to know
- Scope of this report
Executive Summary
- The market
- Revenues suffer from slow growth
  - Figure 1: Car parts aftermarket, by value, 2010-20
- Tyres dominate the replacement parts market
  - Figure 2: Segmentation of the car parts aftermarket, by value, at current prices, 2010-15
- UK car market is ageing
  - Figure 3: Age structure of the car parc in years, 2012 and 2014
- Companies, brands and innovation
- Fragmented supply base is evident in the tyre sector
  - Figure 4: UK – Tyres: Company market share, by volume, 2014
- Advertising expenditure suffers collapse
  - Figure 5: Recorded above-the-line, online display and direct mail total advertising expenditure on aftermarket products, 2011-14
- Innovation in the sector
- The consumer
- Second-hand cars are preferred
  - Figure 6: Vehicle ownership, August 2015
- A significant percentage of cars in ownership are over six years old
  - Figure 7: Age of car driven, August 2015
- Tyres are the part that car owners are most likely to have had to replace
  - Figure 8: Purchase of replacement parts (any purchase), August 2015
- Specialist retailers are preferred for the purchase of replacement parts
  - Figure 9: Channels used for the purchase of replacement parts, August 2015
- Many drivers looking for support from others when buying parts
  - Figure 10: Statements associated with the purchase of replacement parts, August 2015
- What we think
Issues and Insights
- How to boost revenues
- The facts
- The implications
- Overcoming the threat from low-priced competition
- The facts
- The implications
- Communicating with the motorist
- The facts
- The implications
The Market – What You Need to Know
- Sluggish growth in revenues
- Tyres dominate the market
- Budget brands – An issue for the tyre sector
- Technology impacts on other parts market
- UK car parc showing signs of ageing
- Distance travelled falling back
- Car ownership rates appear static
- Replacement of parts varies
Market Size and Forecast
- - Figure 11: UK car parts aftermarket*, by value, at current and constant prices, 2010-20
- - Figure 12: Parts aftermarket, by value, 2010-20
- - Figure 13: Segmentation of the car parts aftermarket, by value, at current prices, 2010-15
Segment Performance
- Tyres – A mature market hit by a shift to budget brands
  - Figure 14: Tyre sales, by value (at current prices) and volume, 2010-15
- Budget tyres slowly growing share of sales
  - Figure 15: Tyre segmentation for replacement car tyres, by volume percentage, 2010-15
- Winter tyres suffer as all-season tyres see growth
  - Figure 16: Winter/all-season tyres, 2010-15
- The issue of part-worns
- Other replacement parts
  - Figure 17: Segmentation of the other replacement parts market, by value, at current prices, 2010-15
- Winners and losers
- Winners
- Losers
- Technology brings mixed benefits
Market Drivers
- New sales increasing in both private and business and fleet sectors
- - Figure 18: UK new registrations of motor vehicles, 2010-15
- Developments in the UK car parc bring mixed messages
  - Figure 19: Age structure of the car parc in years, 2012-14
- Cost of car ownership on the rise
  - Figure 20: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2010-14
- Diesels account for over half of new cars sold
  - Figure 21: New car registrations, by fuel type, 2010-15
- Distance travelled is in steady decline
  - Figure 22: Trips, distance travelled and time taken, 2004-14
- Stagnation in car ownership and multi-car households
  - Figure 23: Percentage of households with car availability in England, 1995-2014
- Tyres are the part most likely to have been replaced
  - Figure 24: Purchase of replacement parts, August 2015
- Parts failures as part of MOT are in decline
  - Figure 25: Road vehicle testing scheme (MOT), selected reasons for failure, car tests, 2009/10-2013/14
- Strong new car sales signal potential difficulties for some parts of the market
- Impact of maintenance delays
- Other factors influencing the market
Key Players – What You Need to Know
- Tyre market sees evidence of new entrants
- Parts aftermarket supports a large number of suppliers
- Channels to market are highly fragmented
- Innovation targets all areas
- Advertising expenditure plummets
Market Share
- Tyres
- Growing demand for budget tyres boosts the profile of smaller players
  - Figure 26: UK – Tyres: Company market share, by volume, 2014
- Other replacement parts
Companies and Services
- A diverse market
- Sluggish turnover for many in the tyre market
  - Figure 27: Revenues for the leading auto parts suppliers, factors and retailers and tyre manufacturers, 2010/11-2014/15
- Operating profits record significant falls for some in the parts market
  - Figure 28: Operating profits for the leading auto parts suppliers, factors and retailers and tyre manufacturers, 2010/11-2014/15
Channels to Market
- Replacement parts are offered via a number of channels
  - Figure 29: Aftermarket outlets for sales of replacement parts *, 2010-15
- Independent garages suffering from a steady decline
- Forecourts suffer a major contraction
- Franchised dealer network sees stability
- Fast-fit network is stable
  - Figure 30: Top 10 tyre and exhaust fitting centres, by number of outlets, 2012-15
- Halfords dominates retail market
  - Figure 31: Leading car accessory chains, by number of outlets, 2012-15
- Motor factor market in decline
- The internet
Advertising and Marketing Activity
- Advertising expenditure continues to fall…
  - Figure 32: Recorded above-the-line, online display and direct mail total advertising expenditure on aftermarket products, 2011-15
- …with consumers generally unresponsive to adverts and brands
- Tyres remain the biggest area of spending
  - Figure 33: Recorded above-the-line, online display and direct mail total advertising expenditure on aftermarket products, by category, 2011-14
- Brakes account for 11% of expenditure
  - Figure 34: Recorded above-the-line, online display and direct mail total advertising expenditure on car parts as a percentage of the total expenditure (excludes tyres), 2014
- Press advertising dominates
  - Figure 35: Recorded above-the-line, online display and direct mail total advertising expenditure on car aftermarket products, by media type, 2011-14
- Different channels are preferred by tyre and parts manufacturers
  - Figure 36: Recorded above-the-line, online display and direct mail total advertising expenditure on passenger tyres, by media type, 2011-14
  - Figure 37: Recorded above-the-line, online display and direct mail total advertising expenditure on components and parts, by media type, 2011-14
- Passenger tyres: Continental ups its advertising in 2014
  - Figure 38: Recorded above-the-line, online display and direct mail total advertising expenditure on passenger tyres, 2011-14
- Components and parts: fragmented market
  - Figure 39: Recorded above-the-line, online display and direct mail total advertising expenditure on motor components and parts, 2011-14
- A note on adspend
Launch Activity and Innovation
- Wireless clutch reduces emissions and stalling
- New user-friendly website for Bosch Auto Parts
- Continental takes its dandelion rubber tyres to the road
- Car manufacturers invest in mapping technology
- Combatting cyber-attacks on ‘connected’ cars
- Hankook teams up with shoe sole manufacturer
  - Figure 40: The collaboration between Hankook and Vibram, 2015
- Lighting to illuminate hazards
The Consumer – What You Need to Know
- Cars purchased used are more important than cars purchased from new
- Car ownership spans a range of vehicles
- Tyres – The part most often replaced
- Specialist retailers popular for purchases
- Worries about fitting and an interest in branded parts dominate thinking
Car Ownership
- Most car owners bought their vehicle used
  - Figure 41: Car ownership, August 2015
- Car ownership is the preserve of older adults
- London – A city of contrasts
- Income impacts on owning from new or buying used
Age of Car Driven
- Car parc shows evidence of a focus towards newer cars
  - Figure 42: Age of car driven, August 2015
- Older adults prefer older cars
- Location, employment and socio-economic status also impact on age of vehicle ownership
- Strong car market boosts profile of new cars
  - Figure 43: Age of car driven, 2011-15
Purchase of Replacement Parts
- Tyres are the most likely part to have been replaced
- Some car parts need replacing more than others
  - Figure 44: Purchase of replacement parts, August 2015
- Men are more likely to have purchased parts
- Older men are an important purchasing group
- Parts replacement is higher in London
- Tyres and oil filters are less popular for those in certain socio-economic groups
- Tyres and shock absorbers are common purchases for owners of used cars
- Older cars are typically more likely to need replacement parts
Channels used for the Purchase of Replacement Car Parts
- Specialist motor retailers are popular for purchasing replacement parts
  - Figure 45: Channels used for the purchase of replacement parts, August 2015
- Internet popular with men, young adults and those on the highest incomes
- Women and older adults like to rely on others
- City and rural car owners shop differently
- Specialist retailers positioned towards more affluent adults
- Indirect purchases are important for owners of used vehicles…
- …as well as owners of older cars
Statements Associated with Replacing Car Parts
- Worries about replacing parts prompt the strongest opinions
- - Figure 46: Statements associated with replacement parts, August 2015
- Men want security through the purchase of branded parts
- Young drivers are happy to look at alternative ways of purchasing
- Older adults know about reliability
- Less affluent look at ways of saving money
- Adverts find favour with young, urban adults
- Multiple parts purchasing is focused on specific groups
Appendix – Data and Sources
- Data sources
- Exclusions
- Market sizing and segment performance
- Fan chart forecast
- Abbreviations