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Car Review - UK - February 2018

“After a period of growth the UK car market has begun to enter a period of stability. New sales are in decline while the used market has stagnated. Yet within the market change continues. Owners are increasingly looking for a more bespoke vehicle with a growing percentage also looking for a car to match their lifestyle.”

– Neil Mason, Head of Retail Research

This report examines the following issues:

  • 2017 sees new car market volumes decline as used sector stalls
  • SUVs/4x4 cars are set to continue to grow their share of the market
  • Digital as a communication channel shouldn’t be overlooked

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Table of contents

  1. Overview

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

          • The market
            • Car market showing signs of stagnation
              • Figure 1: UK new and used car sales, by volume, 2012-22
            • Slowdown in sales is evident in both segments of the market
              • Figure 2: New and used car market volumes, 2012-17
            • Dual and multipurpose vehicles are growing their share of the market
              • Figure 3: New car registrations by broad segment (share), 2012 and 2017
            • Costs of motoring are rising
              • Figure 4: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2012 and 2016
            • Companies and brands
              • Established manufacturers are losing ground
                • Not all brands are viewed equally
                  • Figure 5: Attitudes towards and usage of selected brands, January 2018
                • Advertising spend also showing evidence of stagnation
                  • Innovation remains a key area for manufacturers
                    • The consumer
                      • Car ownership stands at 70%
                        • Figure 6: Car ownership, December 2017
                      • Used cars represent a larger part of the market
                        • Figure 7: Age of car owned, December 2017
                      • Most adults who don’t own a car also don’t drive
                        • Figure 8: Non-car ownership, December 2017
                      • Small and medium-sized vehicles are popular
                        • Figure 9: Type of Car Owned, December 2017
                      • Shopping is the most important use for a car
                        • Figure 10: Reasons for using a car, December 2017
                      • Digital dominates as a source of information
                        • Figure 11: Sources of information, December 2017
                      • Car hire and car sharing are the popular alternatives
                        • Figure 12: Alternatives to car ownership, December 2017
                      • What we think
                      • Issues and Insights

                        • 2017 sees new car market volumes decline as used sector stalls
                          • The facts
                            • The implications
                              • SUVs/4x4 cars are set to continue to grow their share of the market
                                • The facts
                                  • The implications
                                    • Digital as a communication channel shouldn’t be overlooked
                                      • The facts
                                        • The implications
                                        • The Market – What You Need to Know

                                          • After peaking in 2016 new and used car sales are now in decline
                                            • New car sales have been hit hardest by slowdown in demand
                                              • Levels of car ownership are growing strongest in the North of England
                                                • Despite a falling share of new car sales, diesel continues to grow its overall share
                                                  • Franchised dominate as the most important sales channel
                                                    • Costs of motoring spiral upwards during 2016
                                                    • Market Size and Forecast

                                                      • After peaking in 2016 sales will start to fall back in 2017
                                                        • Figure 13: UK new and used car sales, by volume, 2012-22
                                                        • Figure 14: Best- and worst-case forecasts for UK new and used sales, 2012-22
                                                      • Forecast methodology
                                                      • Market Segmentation

                                                        • Stagnation begins to impact on both new and used segments
                                                          • Figure 15: New and used car market volumes, 2012-17
                                                        • Nearly a quarter of cars on the road are now 10 years or older
                                                          • Figure 16: Age structure of the car parc in years, 2012, 2014 and 2016
                                                        • Two thirds of households own two or more cars
                                                          • Figure 17: Percentage of households with car availability, in England, 2006-16
                                                        • Car ownership growing strongest in the North of England
                                                          • Figure 18: Household car ownership by region (England), 2002/03 and 2014/15
                                                        • Dual and multipurpose vehicles benefit from increased interest …
                                                            • Figure 19: New car registrations, by broad segment, 2012-17
                                                          • … accounting for over a fifth of new car sales in 2017
                                                            • Figure 20: New car registrations by broad segment (share), 2012-17
                                                          • Dual purpose is clear winner as a number of other categories fall out of favour
                                                            • Figure 21: New car registrations by category, 2010, 2015 and 2016
                                                          • Concerns about diesel sees surge in demand for petrol …
                                                            • Figure 22: Sales of new cars by fuel type, 2012-17
                                                          • … although diesel continues to grow its share overall
                                                            • Figure 23: Fuel use within the car parc, 2012-16
                                                        • Channels to Market

                                                          • Franchised dealers benefit from recent buoyant new car sales
                                                            • Figure 24: Sales of new and used cars, by channel, 2013-17
                                                        • Market Drivers

                                                          • Men are more likely to hold a driving licence
                                                            • Figure 25: Full car driving licence holders, England, 2016
                                                          • Costs of motoring spirals upwards during 2016…
                                                            • Figure 26: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2012-16
                                                          • … with revised VED rates for new cars adding further pressure on buyers of new cars
                                                            • Figure 27: VED rates, April 2017
                                                          • Distance travelled and number of trips showing signs of growth
                                                            • Figure 28: Trips, distance travelled and time taken, England, 2006-16
                                                          • Cars still dominate when compared to other transport options
                                                            • Figure 29: Mode share (average distance travelled), England, 2015
                                                          • Cars favoured for business, commuting and shopping …
                                                            • Figure 30: Percentage of trips made by transport type (England), 2016
                                                          • … with a near universal spread of their use by age
                                                            • Figure 31: Mode share (average distance travelled), England, 2016
                                                          • More consumers plan to buy than not buy a car in the next 3 years
                                                            • Figure 32: Do you or someone else in your household plan to buy a car(s) within the next 3 years, December 2017
                                                          • Buying new is the preferred choice for many potential purchasers
                                                            • Figure 33: Intention of purchasing a car/s in the next three years, by new or second-hand purchase, December 2017
                                                          • Hybrid and electric cars set to play a greater part in the market
                                                            • Figure 34: Hybrid and electric new car registrations (Great Britain), by volume*, 2011-21
                                                          • Number of larger households continues to increase
                                                            • Figure 35: Percent of households, United Kingdom, 2007 and 2017
                                                          • The UK’s population is expected to age
                                                            • Figure 36: Trends in the age structure of the UK population, 2011-21
                                                        • Companies and Brands – What You Need to Know

                                                          • A market in flux
                                                            • All things electric
                                                              • Promotional support remains high
                                                                • A number of brands are positioned well within the market
                                                                • Market Share

                                                                  • Big players suffer fall in share with Vauxhall performing the worst
                                                                    • Mercedes-Benz typical of the premium marques performing well
                                                                      • Innovative manufacturers are also making good progress
                                                                        • Figure 37: Manufacturer shares of new car registrations, 2011, 2013, 2015 and 2017
                                                                      • Executive models challenge traditional top 10 hierarchy
                                                                        • Figure 38: Top 10 new car models, 2017
                                                                      • Established models continue to dominate the used car market
                                                                        • Figure 39: Top 10 used car models, 2017
                                                                    • Launch Activity and Innovation

                                                                      • Dyson set to launch electric car in 2020
                                                                        • Nissan brain to vehicle technology
                                                                          • Figure 40: Nissan Brain to Vehicle Technology
                                                                        • Volvo becomes the first major car manufacturer to go electric
                                                                          • Figure 41: Volvo mild hybrid 48 volt technology
                                                                        • Chinese start-up offers cross between car and smartphone
                                                                          • Figure 42: Byton interior view
                                                                      • Advertising and Marketing Activity

                                                                        • Promotional expenditure remains high
                                                                          • Figure 43: Recorded above-the-line, online display and direct mail total advertising expenditure by car manufacturers, 2013-17
                                                                        • Support for the 4x4 categories results in it becoming the largest market
                                                                          • Figure 44: Recorded above-the-line, online display and direct mail total advertising expenditure, by type of car, 2013-17
                                                                        • Company ambitions often influence promotional investment
                                                                          • Figure 45: Recorded above-the-line, online display and direct mail total advertising expenditure by leading car manufacturers, 2013-17
                                                                        • Digital grows its share to challenge television
                                                                          • Figure 46: Percentage media type split of recorded above-the-line, online display and direct mail total advertising expenditure by car manufacturers, 2013-17
                                                                        • Nielsen Ad Intel coverage
                                                                        • Brand Research

                                                                            • Premium brands and Ford score well
                                                                                • Figure 47: Attitudes towards and usage of selected brands, January 2018
                                                                              • Key brand metrics
                                                                                  • Figure 48: Key metrics for selected brands, January 2018
                                                                                • Brand attitudes: Asian brands offer good value while premium marques offer quality
                                                                                  • Figure 49: Attitudes, by brand, January 2018
                                                                                • Brand personality: Many major brands are viewed as having particular personalities
                                                                                  • Figure 50: Brand personality – macro image, January 2018
                                                                                • Many mass-market brands are viewed as user friendly
                                                                                  • Figure 51: Brand personality – micro image, January 2018
                                                                              • The Consumer – What You Need to Know

                                                                                • Car ownership stands at 70%
                                                                                  • Used cars are more prevalent than new cars
                                                                                    • Most non-car owners don’t drive
                                                                                      • Small and medium-sized vehicles are most popular with car owners
                                                                                        • Shopping is a key reason for using a car
                                                                                          • Digital dominates as a source of information
                                                                                            • Car hire and car sharing are popular alternatives to ownership
                                                                                            • Car Ownership

                                                                                              • Car ownership stands at 70%
                                                                                                • Figure 52: Car ownership, December 2017
                                                                                              • Large families and income are key in influencing car ownership
                                                                                                • Car ownership appears to have stagnated since 2016
                                                                                                  • Figure 53: Car ownership, 2014-2017
                                                                                              • Age of Car Owned

                                                                                                • Used cars are more popular than new cars
                                                                                                  • Figure 54: 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 has also stalled
                                                                                                          • Figure 55: Age of Car Owned, 2014-2017
                                                                                                      • Non-Car Ownership

                                                                                                        • Most non-car owners don’t drive
                                                                                                          • Figure 56: Non-car ownership, December 2017
                                                                                                        • Age, gender and affluence are all associated with not owning a car
                                                                                                        • Type of Car Owned

                                                                                                          • Small and medium-sized vehicles are most popular with car owners
                                                                                                            • Figure 57: Type of Car Owned, December 2017
                                                                                                          • Young adults have particular preferences
                                                                                                            • Men look for a larger vehicle
                                                                                                              • Affluent want more specialist vehicles
                                                                                                                • Compact cars and SUVs are especially popular with new car buyers…
                                                                                                                  • …boosting their share of ownership
                                                                                                                    • Figure 58: Type of car owned, 2014, 2016 and 2017
                                                                                                                • Reasons for Using a Car

                                                                                                                  • Shopping is a key reason for using a car
                                                                                                                    • Figure 59: Reasons for using a car, December 2017
                                                                                                                  • Young and old have different demands from a car
                                                                                                                    • Commuting is a feature for the most affluent car owners
                                                                                                                      • Cars purchased in the last two years are more likely to be used for commuting
                                                                                                                      • Sources of Information

                                                                                                                        • Digital dominates as a source of information
                                                                                                                          • Figure 60: Sources of information, December 2017
                                                                                                                        • Young men show most interest in information on cars
                                                                                                                          • Demands from urban areas necessitate a broad communication strategy
                                                                                                                            • Publications are popular with the A socio economic group
                                                                                                                              • Repertoire analysis notes interest of young men and affluent adults in multiple channels
                                                                                                                                • Car owners show a strong preference for particular channels …
                                                                                                                                  • … with this especially true of new car owners
                                                                                                                                  • Alternatives to Car Ownership

                                                                                                                                    • Car hire and car sharing are the popular alternatives
                                                                                                                                      • Figure 61: Alternatives to car ownership, December 2017
                                                                                                                                    • Young adults are a key target
                                                                                                                                      • Affluence plays a major factor
                                                                                                                                        • Interest in alternatives is highest in urban areas
                                                                                                                                          • Older adults are likely to consider a variety of alternatives
                                                                                                                                            • Alternatives are of less interest to non-car owners
                                                                                                                                              • Owners of recently purchased cars are an important target
                                                                                                                                                • Interest in alternatives to car ownership is growing
                                                                                                                                                  • Car sharing economy
                                                                                                                                                    • Figure 62: Alternatives to car ownership, 2015 and 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 Review - UK - February 2018

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