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Car Purchasing Process - UK - March 2019

“Car sales are currently passing through a difficult period with both new and used car volumes falling back in 2017 and 2018. Despite this, interest in certain types of car has been rising, notably those in the mini segment as well as dual-purpose and luxury cars. Equally there is growing demand for vehicles outside of the diesel market such as petrol and alternative fuels.”
– Neil Mason, Head of Retail Research

This report looks at the following areas:

  • Difficulties for both new and used sales
  • Alternatives to petrol and diesel still need to make progress
  • Online is not making progress in all areas

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Table of contents

  1. Overview

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

          • The market
            • Sales down for a second consecutive year
              • Figure 1: UK new and used car sales, by volume, 2013-23
            • New and used car volumes are both in decline
              • Figure 2: New and used car sales, by volume, 2013-18
            • Demand for new diesel cars collapses
              • Figure 3: Sales of new cars, by fuel type, by volume, 2013 and 2018
            • Franchised dealers dominate the market
              • Figure 4: New and used car volumes, by channel, 2014 and 2018
            • Companies and brands
              • Mass-market brands suffer as many more buyers look towards premium marques
                • Acquisitions remain a key feature of the supplier market
                  • Advertising expenditure down 11% in 2018 compared with previous year
                    • The consumer
                      • 70% of adults own a car
                        • Used car ownership is greater than new car ownership
                          • Main dealers dominate when it comes to sales
                            • Figure 5: Where last car was purchased, November 2018
                          • 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, November 2018
                          • Over half expect to buy in the next 12 months
                            • Figure 7: Timescale for purchasing a car in the next three years, November 2018
                          • New cars account for around half of planned purchases
                            • Figure 8: Likelihood of new or used purchase, November 2018
                          • Online dominates for most stages of the car buying process
                            • Figure 9: Innovations sought by buyers, November 2018
                          • Petrol is by far the most preferred fuel for buyers
                            • Figure 10: Preference for future fuel types, November 2018
                          • Innovations focused around parking are popular with buyers
                            • Figure 11: Innovations sought by buyers, November 2018
                          • What we think
                          • Issues and Insights

                            • Difficulties for both new and used sales
                              • The facts
                                • The implications
                                  • Alternatives to petrol and diesel still need to make progress
                                    • The facts
                                      • The implications
                                        • Online is not making progress in all areas
                                          • The facts
                                            • The implications
                                            • The Market – What You Need to Know

                                              • Car market is expected to see mixed fortunes going forward
                                                • Difficulties evident for new/used and private/fleet/business sectors
                                                  • Franchised dealers increasing their share of sales
                                                    • Consumer financial wellbeing subdued during 2018
                                                    • Market Size and Forecast

                                                      • Total car sales fall 3.2% during 2018
                                                        • Figure 12: UK new and used car sales, by volume, 2013-23
                                                        • Figure 13: Best- and worst-case forecasts for UK new and used car sales, 2013-23
                                                      • Forecast methodology
                                                      • Market Segmentation

                                                        • New and used car purchasing softens
                                                          • Figure 14: New and used car market volumes, 2013-18
                                                        • Private market suffers greater loss than business and fleet sector…
                                                          • Figure 15: UK new registrations of cars, 2013-18
                                                        • …resulting in growth in market share for company registrations
                                                          • Figure 16: New car registrations, by keeper, Great Britain, 2013-17
                                                        • Dual/Multipurpose vehicles grow their share of new car sales
                                                          • Figure 17: New car registrations, by broad segment (volume share), 2013 and 2018
                                                        • Few segments have performed well since overall sales began to decline in 2016
                                                          • Figure 18: Change in new car registrations, by segment (volume), 2016-18
                                                        • North-South divide emerging for new car registrations
                                                          • Figure 19: New car registrations, by region, United Kingdom, 2013-17
                                                        • Less than a third of new cars sold in 2018 were diesel…
                                                          • Figure 20: Sales of new cars, by fuel type, 2013-18
                                                        • …with electric and hybrid cars becoming increasingly popular
                                                          • Figure 21: Hybrid and electric new car registrations (Great Britain), by volume, 2013-23
                                                      • Channels to Market

                                                        • Franchised dealers strengthen market presence
                                                          • Figure 22: Sales of new and used cars, by channel, 2014-18
                                                        • Private sellers are of declining importance for used sales
                                                          • Figure 23: Sales of new and used car volumes, by channel, 2014-18
                                                        • Dealer network in decline
                                                          • Figure 24: Number of UK franchised dealer outlets, 2008-18
                                                        • Biggest brand portfolios suffer some of the biggest falls
                                                          • Figure 25: Percentage change in sales points (10 largest brands), 2008-18
                                                        • Consolidation boosts profile of larger groups
                                                          • Figure 26: Top 10 main dealership groups in the UK, by turnover, 2018
                                                        • Motorpoint dominates the independent sector
                                                          • Figure 27: Top 10 independent dealership groups in the UK, by turnover, 2017/18
                                                        • Online retailing remains a niche channel
                                                          • Competition amongst major online players intensifies
                                                          • Market Drivers

                                                            • Consumer wellbeing has fallen during 2018…
                                                              • Figure 28: The financial wellbeing index, January 2015-October 2018
                                                            • …as Brexit concerns for the sector heighten
                                                              • Consumer lending for cars up significantly since 2013
                                                                • Figure 29: Value of advances (£m) on sales of all cars bought on finance by consumers at point of sale, 2013-18
                                                              • Inflationary pressures ease during 2018
                                                                • Figure 30: Annual change in CPI, Q1 2008-Q4 2018
                                                              • Rising costs hit those owning and using a car…
                                                                • Figure 31: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2013-17
                                                              • …with average insurance costs up 18.7% between 2013 and 2018
                                                                • Figure 32: Average premium for comprehensive car insurance policies, 2013-18
                                                              • A number of alternatives to car ownership are available
                                                                • Figure 33: Alternatives to car ownership, 2015 and 2017
                                                                • Figure 34: Car club vehicle and membership (Great Britain), May 2018
                                                              • Taxi and private hire licences expand significantly since 2005
                                                                • Figure 35: Total licensed taxi and private hire vehicles (England and Wales), 2005-18
                                                              • Bus use down while use of rail ahead
                                                                • Figure 36: Public transport passenger journeys (Great Britain), 2007/08-2017/18
                                                            • Companies and Brands – What You Need to Know

                                                              • Mass-market manufacturers suffer from fall in share
                                                                • Acquisitions are a feature of the market
                                                                  • Innovations focus on retailing
                                                                    • Advertising expenditure falls 11% during 2018 compared with 2017
                                                                    • Market Share

                                                                      • Mass-market manufacturers suffer a fall in market share
                                                                        • Mercedes-Benz is the best-performing major brand
                                                                          • Figure 37: Manufacturer shares of new car registrations, 2012-18
                                                                        • Big models suffer as market fragments…
                                                                          • Figure 38: Leading new car models, 2014-18
                                                                        • …with evidence of a similar trend in the used market
                                                                          • Figure 39: Leading used car models, 2016-18
                                                                      • Competitive Strategies

                                                                        • Acquisitions continue to be key elements for growth
                                                                        • Launch Activity and Innovation

                                                                          • Ford looks at a diversified approach towards retailing
                                                                            • Figure 40: Digital FordStore, Manchester, 2018
                                                                          • Tootle expands presence into car retailing
                                                                            • Amazon proving popular as a way to engage with potential buyers
                                                                              • Figure 41: Alfa Romeo Amazon test drive initiative, 2018
                                                                            • LeasePlan looking to disrupt market with home deliveries
                                                                              • Volkswagen pursuing a Europe-wide approach to retailing
                                                                              • Advertising and Marketing Activity

                                                                                • Investment drops 11% in 2018
                                                                                  • Figure 42: Recorded above-the-line, online display and direct mail total advertising expenditure by UK car dealers, 2014-18
                                                                                • Investment is focused on February and August
                                                                                  • Figure 43: Recorded above-the-line, online display and direct mail total advertising expenditure by UK car dealers, monthly share of annual expenditure, 2017 and 2018
                                                                                • Webuyanycar.com is the biggest investor
                                                                                  • Figure 44: Leading UK car dealers: Recorded above-the-line, online display and direct mail total advertising expenditure, 2014-18
                                                                                • Television dominates with digital growing its presence
                                                                                  • Figure 45: UK car dealers: recorded above-the-line, online display and direct mail total advertising expenditure, by media type, 2014-18
                                                                                • Nielsen Ad Intel coverage
                                                                                • The Consumer – What You Need to Know

                                                                                  • 70% of adults own a car
                                                                                    • Men and young adults are important car buyers in the last two years
                                                                                      • Main dealers are the most popular channel for purchasing
                                                                                        • Over half of adults plan to buy a car in the next three years
                                                                                          • Use of online and dealers/garages when purchasing varies
                                                                                            • Petrol is by far the most popular choice of fuel
                                                                                              • Technical features associated with parking are popular with buyers
                                                                                              • Car Ownership

                                                                                                • More than seven out of 10 adults own a car
                                                                                                  • Figure 46: Car ownership, November 2018
                                                                                                • Wealth plays a major factor in car ownership
                                                                                                  • Car ownership is gradually increasing
                                                                                                    • Figure 47: Car ownership, 2014-18
                                                                                                  • Used cars purchased represent a bigger market
                                                                                                    • Figure 48: Age of car owned, November 2018
                                                                                                  • Young and old adults focus on different market sectors
                                                                                                    • Men are likely to buy new while women are more likely to buy used
                                                                                                      • City residents favour buying new
                                                                                                        • Wealth impacts strongly on new and used choice
                                                                                                          • New car sales have benefited most in recent years
                                                                                                            • Figure 49: Age of car owned, 2014-18
                                                                                                          • The majority of those without a car don’t possess a driving licence
                                                                                                            • Figure 50: Other access to cars, November 2018
                                                                                                          • Age is the most important factor for non-car ownership
                                                                                                            • Older adults have the potential to become car owners
                                                                                                            • Where Last Car Was Purchased

                                                                                                              • Over half of cars are purchased at a main dealer
                                                                                                                • Figure 51: Where last car was purchased, November 2018
                                                                                                              • Main dealers popular with most affluent and oldest buyers…
                                                                                                                • …while least affluent favour independent dealers
                                                                                                                  • Youngest adults favour private sellers
                                                                                                                    • Dealers popular for purchasers of new cars
                                                                                                                      • Main dealers strengthen their market presence
                                                                                                                        • Figure 52: Where last car was purchased, 2016-18
                                                                                                                    • Car Purchasing Intentions

                                                                                                                      • Over half of adults plan to buy a car in the next three years
                                                                                                                        • Figure 53: Intention to purchase a car in the next three years, November 2018
                                                                                                                      • Young adults are committed purchasers
                                                                                                                        • Wealth and status play a major factor in purchase intentions
                                                                                                                          • Intentions of city residents towards purchasing need to be noted
                                                                                                                            • New car owners are more confident about short-term purchasing
                                                                                                                              • Uncertainty overall is increasing towards buying a car
                                                                                                                                • Figure 54: Intention of purchasing a car/s in the next three years, 2016-18
                                                                                                                              • Over half of those purchasing will do so in the next year
                                                                                                                                • Figure 55: Timescale for purchasing a car in the next three years, November 2018
                                                                                                                              • Men and women have different priorities
                                                                                                                                • Rural purchasers seem less keen to buy in the next year
                                                                                                                                  • New car owners favour purchasing in the coming 12 months
                                                                                                                                    • Short-term interest in buying remains strong
                                                                                                                                      • Figure 56: Timescale for purchasing a car in the next three years, 2016-18
                                                                                                                                    • Around half of buyers will purchase a new car
                                                                                                                                      • Figure 57: Likelihood of new or used purchase, November 2018
                                                                                                                                    • Men prefer new while women used
                                                                                                                                      • Preferences also exist by age
                                                                                                                                        • Urban buyers are likely to opt for new over used
                                                                                                                                          • Buying new is already popular with existing new car owners
                                                                                                                                            • Interest in buying new has fluctuated since 2016
                                                                                                                                              • Figure 58: Intention of purchasing a car/s in the next three years, 2016-18
                                                                                                                                          • Role of Online When Purchasing

                                                                                                                                            • Online dominates up to finalising choice of car
                                                                                                                                              • Figure 59: Innovations sought by buyers, November 2018
                                                                                                                                            • Online popular with young adults at early and final stages of purchase
                                                                                                                                              • Urban residents favour online for finalising their choice
                                                                                                                                                • Online popular channel for owners of used cars
                                                                                                                                                • Interest in Fuel Types

                                                                                                                                                  • Petrol is the clear leader as a fuel
                                                                                                                                                    • Figure 60: Preference for future fuel types, November 2018
                                                                                                                                                  • Young adults are not fully embracing environmental technology
                                                                                                                                                    • Hybrids popular with middle-aged adults
                                                                                                                                                      • Londoners shun traditional fuels
                                                                                                                                                        • Lack of interest in new fuels from those planning to buy used
                                                                                                                                                          • Pure Electric and Plug-in Hybrid are increasingly of interest
                                                                                                                                                            • Figure 61: Preference for future fuel types, 2016-18
                                                                                                                                                        • Innovations Sought by Buyers

                                                                                                                                                          • Parking assistance dominates interest
                                                                                                                                                            • Figure 62: Innovations sought by buyers, November 2018
                                                                                                                                                          • Middle-aged adults favour parking and driving support
                                                                                                                                                            • Night vision appeals to rich and poor
                                                                                                                                                              • Strong interest in multiple innovations
                                                                                                                                                                • Buyers of new cars are more likely to seek out innovations
                                                                                                                                                                • 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 tables
                                                                                                                                                                                • Figure 63: New and used car market sales, by volume, 2013-23
                                                                                                                                                                                • Figure 64: Forecast of new and used car sales, by volume – Best- and worst-case scenarios, 2018-23

                                                                                                                                                                            Car Purchasing Process - UK - March 2019

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