The car buying process in the UK has been impacted by the cost-of-living crisis. The UK car selling industry is facing numerous challenges thanks to changing consumer attitudes and behaviour. Our UK Car Purchasing Market Report provides the information and analysis you need to navigate this evolving market, and features market projections, UK car purchasing trends, and comprehensive consumer research. Read on for a preview of our complete market report.
UK Car Buying Market – Current Landscape
The ongoing cost-of-living crisis is delaying any recovery in demand for cars following the difficulties for the car buying market during and immediately after the pandemic. The income squeeze has limited the appetite of buyers and specifically impacted the new car market.
UK Car Buying Market – Consumer Trends
Used cars have long dominated the UK market, and the past year has seen a further boost as the new car buying market has been impacted by multiple challenges. This heightened demand led to prices of used cars increasing sharply during 2022. Prices are now showing signs of softening, thanks in part to increased pressures on household incomes tempering demand and affordability.
- UK car industry consumer intentions: The number of consumers who are definitely planning to buy a new or used vehicle in 2022 is 22%, down 7% compared to 2021.
- UK car market consumer segmentation:Â In the past twelve months, there has been a 19% increase in men aged 17-34 who are interested in buying a used car.
- UK car industry consumer attitudes:Â Interest in purchasing an electric vehicle is down 7% among consumers planning to buy a car in the next 3 years.
UK Car Buying Market – Future Trends
Online is a major opportunity for the UK car buying market. Mintel’s market research suggests that 6% of recent car purchases were made online, with this double that which was reported two years previously. Focusing on those already comfortable in purchasing goods online should deliver good short-term opportunities for sellers.Â
Read on to discover more about the content of our UK Car Purchasing Market Report. Looking for more information about the UK automotive industry? Take a look at our UK Car Review Market Report, or browse our extensive automotive market research.
Quickly Understand
- The impact of the current cost of living crisis on the demand for new and used cars since it began to become an issue in late 2021.
- Wider developments affecting the car market such as shifts in preferences for particular vehicle categories and preferences towards cars using different fuels.
- The key drivers that are currently affecting the sale of cars and main the channels that are used for their sale.
- Recent developments in the performance of car manufacturers and specific vehicles in both new and used markets.
- Consumer research profiling car ownership and current demand for new and used vehicles, car purchasing intentions over the next three years, preferences from potential buyers towards cars using different fuels as well as current interest in the main methods available for purchasing.
Leading Brands in UK Car Purchasing Industry
Auto Trader, Heycar, webuyanycar.com, Cazoo, Cinch, Motorway, Arnold Clark, Motorpoint, Evans Halshaw, Bristol Street Motors.
Expert Analysis from a Specialist in the Retail Sector
This report, written by Neil Mason, a leading senior analyst in the retail sector, delivers in-depth commentary and analysis to highlight current trends in the UK car buying market and add expert context to the numbers.
Car purchases stumbled during 2022 as the impact of cost of living pressures affected consumer demand. While the situation is expected to improve during 2023, sellers will still be dealing with a largely cautious customer base. Used cars will be preferred to new with many buyers likely to delay their entry into the market as a purchaser.
Neil Mason
Head of Retail Research
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Overview
- Key issues covered in this Report
- Products covered in this Report
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Executive Summary
- The five-year outlook for the car market
- Figure 1: Category outlook, 2023-28
- The market
- Market size and forecast
- Figure 2: Market forecast for combined new and used car sales, by volume, 2017-27
- Used car market benefits from stronger demand despite fall during 2022
- Figure 3: New and used car market sales, million units, 2017-22
- Online channels perform the strongest in the used sector
- Figure 4: Sales of used cars, by channel, 2018 and 2022
- Consumer financial confidence falls back during 2022
- Figure 5: Household financial wellbeing index, 2009-22
- Companies and brands
- Cost of living crisis offers opportunities for a larger number of manufacturers
- Figure 6: Change in manufacturer share of sales (top 10 manufacturers as of 2022), 2020 and 2022
- A desire to reach a wide audience increasingly favours television
- Figure 7: Percentage media type split of recorded above-the-line, online display and direct mail total advertising expenditure by car dealers, 2018, 2020 and 2022
- Cost of living pressures prompt interest in diversification
- The consumer
- Various factors are likely to be behind a fall in car ownership
- Figure 8: Car ownership, 2020-22
- Popularity of used cars illustrates the importance for sellers of holding stock in this sector
- Figure 9: Age of car owned, 2020-22
- Encouraging car ownership amongst affluent non-car owners presents opportunities
- Figure 10: Other access to cars, 2022
- Online buyers and sellers should exploit popularity with key groups
- Figure 11: Where last car was purchased, 2022
- Current cost of living crisis raises uncertainty amongst purchasers
- Figure 12: Intention of purchasing a car/s in the next three years, 2021-22
- Not all planned car purchases will be made in the coming 12 months
- Figure 13: Timescale for purchasing a car in the next three years, 2022
- Pressures facing buyers forces a shift towards buying used
- Figure 14: Likelihood of new or used purchase, 2021-22
- Interest in switching away from petrol and diesel stalls
- Figure 15: Preference for future fuel types, any likely, 2021-22
- Young families are happy to take on debt when purchasing
- Figure 16: Methods of purchasing, 2022
- The five-year outlook for the car market
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Issues and Insights
- Buyers remain cautious about entering the market
- Move towards EV and hybrid appears to be put on hold
- Collapse in demand for new cars by key buying groups necessitates new strategies
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Market Size and Performance
- Cost of living crisis dampens market recovery post covid
- Figure 17: Combined new and used car sales, by volume, 2017-22
- Profile of used sector strengthens as new car demand slumps
- Figure 18: New and used car sales, by volume, 2017 and 2022
- Cost of living crisis dampens market recovery post covid
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Market Forecast
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- Figure 19: Category outlook, 2023-28
- Stronger new car volumes are expected to stimulate the market
- Figure 20: Market forecast for combined new and used car sales, by volume, 2017-27
- New cars are set to strengthen share of sales
- Figure 21: Forecast for new and used car sales, by volume, 2022 and 2027
- Learnings from the last income squeeze
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- Figure 22: New car sales, by volume, 2007-12
- Forecast methodology
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Market Segmentation
- Used car sector is the stronger as both the new and used sectors see a fall in sales
- Figure 23: New and used car market sales, million units, 2017-22
- Business and fleet sales suffers more than those from private buyers
- Figure 24: New car registrations, million units, 2017-22
- Growing demand raises profile of North West England for registrations
- Figure 25: New car registrations, by region, 2017-21
- Men continue to dominate as private buyers
- Figure 26: New car registrations, by keeper, 2017-21
- Car buyers are increasingly looking for flexibility
- Figure 27: New car registrations, by category, 2017 and 2022
- Dual purpose cars have broad appeal amongst business, fleet and private buyers
- Figure 28: New car registrations, by buying group and category (volume), 2022
- New car buyers increasingly flocking to alternative fuels…
- Figure 29: New car registrations, % of total, 2017 and 2021
- …with B-EVs seeing especially strong demand
- Figure 30: Change in hybrid electric, plug-in hybrid and battery electric car new registrations, 2017 and 2021
- Used car sector is the stronger as both the new and used sectors see a fall in sales
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Channels to Market
- Franchised sector hit by falling new car sales
- Other routes to market are placing increased pressure on independent dealers
- Figure 31: Sales of cars, by channel, 2018-22
- Share of sales for online doubles between 2020 and 2022
- Figure 32: Where last car was purchased, online options, 2020-22
- Franchised dealers dominate new market despite a fall in sales
- Figure 33: Sales of new cars, by channel, 2018 and 2022
- Online boost as profile of established channels falls back
- Figure 34: Sales of used cars, by channel, 2018 and 2022
- New entrants to the market help boost sales outlets
- Figure 35: Number of UK franchised dealer outlets, 2018-22 *
- Pandemic is accompanied by a fall in outlets for many established OEMs
- Figure 36: Change in number of sales points 2020-22, top 20 as of 2022 *
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Market Drivers
- Inflation is the key concern for consumers and brands…
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- Figure 37: Unleaded and diesel pump prices, 2020-22
- …and despite Government support, energy prices are still a major concern
- Rising interest rates mean that the pressure will move up to middle- and higher-income households
- High inflation and rising interest rates will compound the impact of the slowing recovery
- Consumer spending power will be curbed
- Unemployment is at a near-50 year low
- Consumers’ financial wellbeing has fallen from the highs of 2021…
- Figure 38: Household financial wellbeing index, 2009-22
- …and most people are feeling the effects of price rises
- Average insurance premiums remain low post-pandemic
- Figure 39: Average premium for comprehensive car insurance policies, 2018-22
- Higher car prices boost appetite for motor finance
- Figure 40: Value of advances (£m) on sales of all cars bought on finance by consumers at point of sale, 2018-22
- Car club membership sees growth during and after the pandemic…
- Figure 41: Car club vehicle and membership growth, 2018-22
- …with car sharing and car-pooling also offering alternative solutions
- Taxi and private hire markets are still dented by the pandemic…
- Figure 42: Total licensed taxi and private hire vehicles (England and Wales), 2018-22
- …with short-term car rentals also stagnating recently
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Market Share
- Buyers are increasingly looking for something different
- Figure 43: Change in manufacturer share of sales (top 10 manufacturers as of 2022), 2020 and 2022
- Value offered by Far East OEMs is proving popular
- Figure 44: Manufacturer shares of new car registrations, 2018, 2020 and 2022
- Nissan’s Qashqai was the most popular new model in 2022
- Figure 45: Top 10 new car models, 2018-22
- Mass market OEMs dominate used market
- Figure 46: Top 10 used car models, 2018-22
- Buyers are increasingly looking for something different
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Competitive Strategies
- Benefiting from developments in technology
- Using partnerships to broaden market profile
- Focusing on the green agenda to deliver cost savings
- Diversification to minimise risk
- Investment to deliver strategic positioning
- Downsizing in the face of financial difficulties
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Advertising and Marketing Activity
- Activity by online sellers boosts investment
- Figure 47: Recorded above-the-line, online display and direct mail total advertising expenditure by UK car retailers, 2018-22
- Investment wanes during 2022 despite interest from online sellers
- Figure 48: Recorded above-the-line, online display and direct mail total advertising expenditure by UK car retailers, monthly share of annual expenditure, 2021 and 2022
- Online sellers disrupt traditional status-quo
- Figure 49: Leading 10 UK car retailers: Recorded above-the-line, online display and direct mail total advertising expenditure, 2018-22
- Television is increasingly preferred
- Figure 50: Percentage media type split of recorded above-the-line, online display and direct mail total advertising expenditure by car dealers, 2018, 2020 and 2022
- Nielsen Ad Intel coverage
- Activity by online sellers boosts investment
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Car Ownership
- 72% of adults are car owners
- Figure 51: Car ownership, 2022
- Income and wealth have a major impact on car ownership
- Car ownership falls post-pandemic
- Figure 52: Car ownership, 2019-22
- 72% of adults are car owners
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Age of Car Owned
- Pre-pandemic purchases dominate the market
- Figure 53: Age of car owned, 2022
- Men prefer owning a car purchased new
- Women present an opportunity for used cars
- Cities are important for new car purchases
- Wealth has a major influence on purchasing new or used
- Older adults prefer owning older cars
- Fall in profile of new car sales as older, used vehicles strengthen profile
- Figure 53: Age of car owned, 2019-22
- Pre-pandemic purchases dominate the market
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Other Access to Cars
- Most non-car owners don’t have a driving licence
- Figure 54: Other access to cars, 2022
- Young adults are most likely to not hold a driving licence…
- …as are the less wealthy
- Exploiting income to encourage car ownership
- Most non-car owners don’t have a driving licence
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Where Last Car Was Purchased
- Dealers dominate as a purchasing channel with main dealers taking over half of sales
- Figure 55: Where last car was purchased, 2022
- Franchised dealers can benefit from continuing popularity with older women
- Independent dealers are well placed with those less affluent
- Online needs to exploit appeal with young and ethnic minorities
- Competition within used car market reinforces need for sellers to stand out
- Main dealer profile weakens post-pandemic
- Figure 56: Where last car was purchased, 2018-22
- Dealers dominate as a purchasing channel with main dealers taking over half of sales
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Car Purchasing Intentions
- Around half plan to purchase a car in the next three years
- Figure 57: Intention to purchase a car in the next three years, 2022
- Stimulating interest from wealthy buyers shouldn’t be overlooked
- Young adults present good opportunities…
- …as do ethnic minorities
- Overcoming doubts amongst older women need to be addressed
- With new car buyers presenting a challenge used owners offer better prospects
- Last 12 months sees growing uncertainty towards purchasing
- Figure 58: Intention of purchasing a car/s in the next three years, 2018-22
- Over half of purchases will be made in the coming 12 months
- Figure 59: Timescale for purchasing a car in the next three years, 2022
- Fathers, families and the more affluent all should be targeted
- Older adults have their doubts
- New car owners offer best opportunities for 2023
- Short-term interest in purchasing suffers collapse
- Figure 60: Timescale for purchasing a car in the next three years, 2018-22
- Equal interest in purchasing new or used…
- Figure 61: Intention of purchasing new or used in the next three years, 2022
- …although cost of living crisis has seen a shift in preferences
- Figure 62: Intention of purchasing new or used in the next three years, 2018-22
- Men shun buying new
- Young adults lead the charge towards the used sector
- Figure 63: Intention of purchasing a used car in the next three years, by gender and age, 2021 and 2022
- More is needed to encourage wealthy buyers
- Price and value demands offer a route to attract those uncertain of next move
- Around half plan to purchase a car in the next three years
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Preference for Fuel Types
- Petrol and hybrid technology are preferred fuels
- Figure 64: Preference for fuel types, 2022
- Cost of living crisis dents demand for emerging technologies
- Figure 65: Preference for future fuel types, any likely, 2021 and 2022
- Young men are a key market for new fuels…
- Appetite from young adults for diesel is falling
- Weak interest from rural buyers towards EV and PH-EV
- Petrol and hybrid technology are preferred fuels
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Methods of Purchasing
- Most adults who want access to a car want to purchase outright
- Figure 66: Methods of purchasing, 2022
- Young families offer opportunities for new methods of payment
- Preference to buy direct by older adults’ hints at importance of making a deal
- Demands from some for other forms of vehicle access highlight need for new sales models
- Women are open to offers
- Multiple methods of payment are popular with wealthy buyers
- Most adults who want access to a car want to purchase outright
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Appendix – Data Sources, Abbreviations and Supporting Information
- Data sources
- Exclusions
- Market sizing and segment performance
- Abbreviations
- Consumer research methodology
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Appendix – Forecast Methodology
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- Figure 67: Market forecast and prediction intervals for cars, (million units) 2022-27
- Market drivers and assumptions
- Forecast methodology
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