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Car Purchasing Process - UK - March 2018

“The UK car market recorded a fall in sales in 2017 signalling a period of increased difficulty for those involved in production and retail. Yet while factors such as uncertainty following the Brexit vote and rising costs of ownership are currently subduing demand internally, the market continues to offer opportunities as a result of trends towards trading up and interest in buying new over used."
– Neil Mason, Head of Retail Research

This report looks at the following areas:

  • Sellers set for challenging market conditions
  • Demand for diesel plummets
  • Young are selective towards technical innovations

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Car sales soften in 2017 after peaking in 2016
              • Figure 1: UK new and used car sales, by volume, 2012-22
            • Used cars dominate the market
              • Figure 2: New and used car sales, by volume, 2012-17
            • Demand for diesel falls as negative publicity grows
              • Figure 3: Sales of new cars, by fuel type, 2012-17
            • Franchised dealers account for over half of all sales
              • Figure 4: New and used car volumes, by channel, 2017
            • Companies and brands
              • Premium brands are proving popular with buyers
                • Highly competitive market where acquisitions are an important feature
                  • Advertising expenditure expands
                    • The consumer
                      • 70% of adults own a car
                        • Similar percentage of adults have bought new and used cars
                          • Main dealers are the most important sales channel
                            • Figure 5: Where last car was purchased, December 2017
                          • Over half of adults plan to buy a car in the next three years…
                            • Figure 6: Intention to purchase a car in the next three years, December 2017
                          • …with the coming 12 months especially significant
                            • Figure 7: Timescale for purchasing a car in the next three years, December 2017
                          • New cars dominate planned purchases
                            • Figure 8: Likelihood of new or used purchase, December 2017
                          • Petrol is the preferred fuel choice when purchasing a car with hybrid technology second
                            • Figure 9: Preference for future fuel types, December 2017
                          • Technology to assist parking a car is popular
                            • Figure 10: Innovations sought by buyers, December 2017
                          • Savings and part-exchange of a car dominate as payment methods
                            • Figure 11: Methods of payment for next car, December 2017
                          • What we think
                          • Issues and Insights

                            • Sellers set for challenging market conditions
                              • The facts
                                • The implications
                                  • Demand for diesel plummets
                                    • The facts
                                      • The implications
                                        • Young are selective towards technical innovations
                                          • The facts
                                            • The implications
                                            • The Market – What You Need to Know

                                              • Car sales fall back in 2017 after peaking in 2016
                                                • Business and fleet sales perform stronger than the private market
                                                  • Diesel falls out of favour as a fuel
                                                    • Franchised dealers increasingly dominate market
                                                      • More and more consumers uncertain about their finances
                                                        • Alternatives to car ownership are proving popular
                                                        • Market Size and Forecast

                                                          • Sales peak in 2016 with a fall in purchases registered in 2017
                                                            • Figure 12: UK new and used car sales, by volume, 2012-22
                                                            • Figure 13: Forecast for UK new and used sales, 2012-22
                                                          • Forecast methodology
                                                          • Market Segmentation

                                                            • Used cars dominate sales
                                                              • Figure 14: New and used car market volumes, 2012-17
                                                            • South East, South West and East all record an increase in share of sales
                                                              • Figure 15: New car registrations, by region, United Kingdom, 2012-16
                                                            • Business and fleet sales performing the strongest
                                                              • Figure 16: UK new registrations of motor vehicles, 2012-17
                                                            • Personal purchases by men and women are in decline
                                                              • Figure 17: New car registrations by keeper, Great Britain, 2012-16
                                                            • Demand for dual and multipurpose vehicles grows…
                                                                • Figure 18: New car registrations, by broad segment, 2012-17
                                                              • …from all sectors of the buying market
                                                                • Figure 19: Share of vehicle types amongst private purchasers, 2012 and 2017
                                                              • Petrol dominates as diesel falls out of favour amongst buyers
                                                                • Figure 20: Sales of new cars, by fuel type, 2012-17
                                                            • Channels to Market

                                                              • Franchised dealers benefit from recent buoyant new car sales
                                                                • Figure 21: Sales of new and used cars, by channel, 2013-17
                                                              • Dealers see growth in their share of used car sales
                                                                • Figure 22: Sales of new and used car volumes, by channel, 2013-17
                                                              • Dealer network continues to shrink
                                                                • Figure 23: Number of UK franchised dealer outlets, 2008-18
                                                              • Strong new car sales boost franchised market
                                                                • Figure 24: Top 10 main dealership groups in the UK, by turnover, 2016
                                                              • Independent sector dominated by car supermarkets
                                                                • Figure 25: Top 10 independent dealership groups in the UK, by turnover, 2016/17
                                                              • Growing interest in alternative ways of retailing
                                                                • Figure 26: Dedicated manufacturer online portals (UK), 2017
                                                            • Market Drivers

                                                              • Decline in those who view financial situation as healthy during 2017
                                                                • Figure 27: Respondents who describe their financial situation as ‘healthy’, January 2016-September 2017
                                                              • Loan rates continue to be attractive…
                                                                • Figure 28: Monthly percentage values of selected interest rates, January 2012-December 2017
                                                              • …helping to stimulate consumer lending
                                                                • Figure 29: Value of advances (£m) on sales of all cars bought on finance by consumers through dealerships, 2012-17
                                                              • Inflationary pressures evident since 2015…
                                                                • Figure 30: Annual change in CPI, Q1 2006-Q4 2017
                                                              • …impacting on motoring costs
                                                                • Figure 31: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2012-16
                                                              • Cost of car insurance is also rising
                                                                • Figure 32: Average premium for comprehensive car insurance policies, 2012-17
                                                              • Alternative ways of accessing a car are proving of interest
                                                                • Figure 33: Alternatives to car ownership, 2015 and 2017
                                                                • Figure 34: Car club vehicle and membership growth, 2008-17
                                                              • Taxi and private hire licences approach 300,000
                                                                • Figure 35: Total licensed taxi and private hire vehicles (England and Wales), 2007-17
                                                              • Public transport is another challenger to car ownership
                                                                • Figure 36: Public transport passenger journeys (Great Britain), 2006/07-2016/17
                                                            • Companies and Brands – What You Need to Know

                                                              • Premium brands are proving popular with buyers
                                                                • Acquisitions are an important way of competing in the market
                                                                  • Sellers looking at different ways of attracting buyers
                                                                    • Advertising expenditure shows steady increase
                                                                    • Market Share

                                                                      • Established players suffer as buyers look for something different
                                                                        • Premium brands are proving attractive to buyers
                                                                          • Brands that offer something different are also attractive to buyers
                                                                            • Figure 37: Manufacturer shares of new car registrations, 2011-17
                                                                          • Fragmentation increasingly evident when it comes to model share
                                                                            • Figure 38: Leading new car models, 2014-17
                                                                          • Traditional models still dominate used car sales
                                                                            • Figure 39: Leading used car models, 2016 and 2017
                                                                        • Competitive Strategies

                                                                          • Acquisitions are an important feature of the market
                                                                            • Partnering to help strengthen brand presence
                                                                            • Launch Activity and Innovation

                                                                              • Škoda entices customers with Live Tour
                                                                                • Figure 40: Škoda live tour
                                                                              • Growing interest in using retail sale environments
                                                                                • PSA looks at cross-sectoral opportunities
                                                                                • Advertising and Marketing Activity

                                                                                  • Expenditure up 29% between 2013 and 2017
                                                                                    • Figure 41: Recorded above-the-line, online display and direct mail total advertising expenditure by UK car dealers, 2013-17
                                                                                  • Investment is focused on the two annual numeric number plate changes
                                                                                    • Figure 42: Recorded above-the-line, online display and direct mail total advertising expenditure by UK car dealers, monthly share of annual expenditure, 2016 and 2017
                                                                                  • Webuyanycar.com dominates the market
                                                                                    • Figure 43: Leading UK car dealers: Recorded above-the-line, online display and direct mail total advertising expenditure, 2013-17
                                                                                  • Radio and television dominate
                                                                                    • Figure 44: UK car dealers: Recorded above-the-line, online display and direct mail total advertising expenditure, by media type, 2013-17
                                                                                  • Nielsen Ad Intel coverage
                                                                                  • The Consumer – What You Need to Know

                                                                                    • Car ownership steady at 70% of adults
                                                                                      • Main dealers are the most important sales channel
                                                                                        • Over half of adults plan to buy a car in the coming three years
                                                                                          • Petrol is increasingly favoured over diesel
                                                                                            • Assistance with parking is popular with drivers
                                                                                              • Many buyers look to avoid debt
                                                                                              • Car Ownership

                                                                                                • Car ownership stands at 70%
                                                                                                  • Figure 45: Car ownership, December 2017
                                                                                                • Large families and income are key in influencing car ownership
                                                                                                  • Car ownership appears to have stagnated since 2016
                                                                                                    • Figure 46: Car ownership, 2014-17
                                                                                                  • Similar percentage of adults have bought new and used cars
                                                                                                    • Figure 47: Age of car owned, December 2017
                                                                                                  • Affluence has a strong impact on ownership of new cars
                                                                                                    • Age impacts on choice
                                                                                                      • Men are important owners of new cars
                                                                                                        • Londoners prefer to buy new
                                                                                                          • As with ownership, new car purchases within the last two years have also stalled
                                                                                                            • Figure 48: Age of car owned, 2014-17
                                                                                                          • Most non-car owners don’t drive
                                                                                                            • Figure 49: Non-car ownership, December 2017
                                                                                                          • Age, gender and affluence are all associated with not owning a car
                                                                                                          • Where Last Car Was Purchased

                                                                                                            • Main dealers dominate recent purchases
                                                                                                              • Figure 50: Where last car was purchased, December 2017
                                                                                                            • Young and old have different preferences
                                                                                                              • Income and socio-economic status differentiate those using a main dealer
                                                                                                                • Online popular with young women
                                                                                                                  • Current owners of new cars are also likely to be future new car owners
                                                                                                                    • Main dealers increasingly dominate as private sales fall back
                                                                                                                      • Figure 51: Where last car was purchased, 2012-17
                                                                                                                  • Car Purchasing Intentions

                                                                                                                    • Over half of adults plan to buy a car in the next three years
                                                                                                                      • Figure 52: Intention to purchase a car in the next three years, December 2017
                                                                                                                    • Young adults and men are key markets
                                                                                                                      • Socio-economic status also strong indicator of purchasing intentions
                                                                                                                        • Families are key buyers
                                                                                                                          • New car owners more likely to be future buyers
                                                                                                                            • Stagnation evident when it comes to future purchase intentions
                                                                                                                              • Figure 53: Intention of purchasing a car/s in the next three years, 2015-17
                                                                                                                            • For those planning to purchase the next year will be significant
                                                                                                                              • Figure 54: Timescale for purchasing a car in the next three years, December 2017
                                                                                                                            • Young adults are more likely to buy sooner rather than later
                                                                                                                              • Rural buyers look like they will wait
                                                                                                                                • Recent new car purchasers are key purchasers
                                                                                                                                  • Surge in planned purchases during the coming 12 months
                                                                                                                                    • Figure 55: Timescale for purchasing a car in the next three years, 2015-17
                                                                                                                                  • New cars dominate planned purchases
                                                                                                                                    • Figure 56: Likelihood of new or used purchase, December 2017
                                                                                                                                  • Women remain focused on used or are undecided
                                                                                                                                    • Younger adults are more likely to buy used
                                                                                                                                      • Current car owners are more likely to buy new
                                                                                                                                        • Interest in buying a new car continues to grow
                                                                                                                                          • Figure 57: Intention of purchasing a car/s in the next three years, 2015-17
                                                                                                                                      • Interest in Fuel Types

                                                                                                                                        • Petrol dominates with hybrid a second choice
                                                                                                                                          • Figure 58: Preference for future fuel types, December 2017
                                                                                                                                        • Men and young adults show the strongest interest in alternative fuels
                                                                                                                                          • Wealthy adults are a key target for new fuels
                                                                                                                                            • Diesel remains popular with parents and larger households
                                                                                                                                              • Non-car owners are less likely to not have a specific fuel in mind
                                                                                                                                                • Hybrid and electric cars increasingly become a mainstream alternative
                                                                                                                                                  • Figure 59: Preference for future fuel types, 2016-17
                                                                                                                                              • Innovations Sought by Buyers

                                                                                                                                                • Help with parking is a popular area for technology
                                                                                                                                                  • Figure 60: Innovations sought by buyers, December 2017
                                                                                                                                                • Low interest in many technical features from youngest buyers
                                                                                                                                                  • Young men are an important group for emerging technology
                                                                                                                                                    • High income earners are a valuable market
                                                                                                                                                      • Current car owners are more interested in innovations
                                                                                                                                                        • Older adults want more features
                                                                                                                                                        • Methods of Payment

                                                                                                                                                          • Avoiding debt through the use of savings or an asset dominate as payment methods
                                                                                                                                                            • Figure 61: Methods of payment for next car, December 2017
                                                                                                                                                          • Credit is popular with younger adults
                                                                                                                                                            • Wealthy are more likely to use a variety of finance methods
                                                                                                                                                              • PCP is of particular interest to current and new car owners
                                                                                                                                                                • Adults aged 25-34 are more likely to use multiple payment options
                                                                                                                                                                  • More and more payment choices are being considered
                                                                                                                                                                    • Figure 62: Methods of payment for next car, February and December 2017
                                                                                                                                                                • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                  • Data sources
                                                                                                                                                                    • Exclusions
                                                                                                                                                                      • Market sizing and segment performance
                                                                                                                                                                        • Abbreviations
                                                                                                                                                                          • Consumer research methodology
                                                                                                                                                                          • Appendix – Market Size and Forecast

                                                                                                                                                                            • Forecast methodology
                                                                                                                                                                              • Forecast Tables
                                                                                                                                                                                • Figure 63: New and used car market sales, by volume, 2012-22
                                                                                                                                                                                • Figure 64: Forecast of new and used car sales, by volume – best- and worst-case scenarios, 2017-22

                                                                                                                                                                            Car Purchasing Process - UK - March 2018

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