2021
9
UK Car Purchasing Process Industry Report 2021
2021-03-12T03:56:35+00:00
OX1045227
2195
135524
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Report
en_GB
“Demand for cars, both new and used, has been in decline following sales peaking in 2016. Dropping to around 10 million units in 2019, the sector was further affected by…

UK Car Purchasing Process Industry Report 2021

£ 2,195 (Excl.Tax)

Report Summary

Providing the most comprehensive and up-to-date information and analysis of the UK Car Purchasing market, including the behaviours, preferences and habits of the consumer.

Throughout the 2020 and 2021 COVID-pandemic, both the demand and sales of cars fell. Instructions to stay home restricted travel, and the increased financial uncertainty has caused many to put off buying a new or used car.

Car sales for both individuals and larger companies declined, with volume sales falling by 29% and single purchases by 26.5%. While there was less of a decline in individual car sales than in corporate sales, a slow recovery is predicted for both sectors.

While 2020 sales in both new and used car sales fell by 18.3%, the forecast shows a predicted increase by 11.5% in 2021 and reaching 2019 levels by 2023. During the pandemic, direct sales from manufacturers and third-party online sellers captured 5.4% of the purchases.

One of the more long-term threats to the market is the increasing trend of car sharing and car hire services, with private hire licenses increasing by 45.5% between 2015 and 2020. However, the popularity in AFV’s and smaller car designs could provide opportunities for more product launches and innovations by car sellers.

Read on to discover more details or take a look at all of our UK Automotive market research.

Quickly understand

  • The impact of COVID-19 on the UK car market.
  • How COVID-19 and other factors might affect purchasing.
  • Recent developments in sales by new/used, vehicle type and fuel categories.
  • Key drivers impacting on purchasing in the UK market.
  • The main channels used for purchasing
  • Future consumer purchase intentions, preferences by new/used, fuel type as well as the role of online in the purchasing decision.

Covered in this report

Products: Petrol cars, hybrid cars, plug-in hybrid, pure electric, fuel cell, diesel, Mini, Supermini, Executive, Luxury, Sport, Dual Purpose, MPV, Lower and Upper medium, Luxury Saloon.

Car Dealerships: Sytner Group, Lookers Plc, Pendragon Plc, Arnold Clark Automobiles, Vertu Motors Plc, Inchcape Plc, Marshall Motor Holdings Plc, Jardine Motors Group, Group 1 Automotive UK, TrustFord, Motorpoint Group, Car Shops, Car Giant, Available Car, The Trade Centre Group, Big Motoring World, Carbase, Motor Depot, Fords of Winsford, Saxton 4×4, Cazoo, Bristol Street Motors Ltd., Fetchauto Ltd, Vertu Motors Plc, Carconverters, Ford Dealers, Stoneacre Motor Group, Peter Vardy Ltd, Motorway Online Ltd, Ron Skinner & Sons Car Dealer, Evans Halshaw, Chapel House Motor Co Ltd, Macklin Motors.

Manufacturers: Ford, Volkswagon, BMW, Mercedes-Benz, Audi, Vauxhall, Toyota, Nissan, Kia, Skoda, Land Rover, Peugeot, Hyundai, Volvo, MINI, SEAT, Renault, Citroen, Honda, Jaguar, Mazda, Suzuki, Fiat, Dacia, MG.

Expert analysis from a specialist in the field

Written by Neil Mason, a leading analyst in the Automotive sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Demand for cars, both new and used, has been in decline following sales peaking in 2016. Dropping to around 10 million units in 2019, the sector was further affected by the COVID-19 pandemic during 2020 with a further fall. Looking ahead, sales will recover although as they do the market is set to see a change in how consumers wish to research and make a purchase.

Neil Mason
Automotive Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • COVID-19: Market context
    • Economic and other assumptions
    • Products covered in this Report
  2. Executive Summary

    • Impact of COVID-19 on the automotive sector
      • Figure 1: Short-, medium- and long-term impact of COVID-19 on the car sector, February 2021
    • The market
    • Purchasing affected by Brexit and COVID-19 pandemic
      • Figure 2: UK new and used car sales, by volume, 2015-25
    • Slow recovery expected for the market
    • Dual-purpose cars have been popular amongst buyers recently
      • Figure 3: New car registrations, by broad category (volume share), 2015 and 2020
    • COVID-19 disrupts formal sales channels
    • Cars see a new role as COVID-19 dents use of public transport
    • Companies and brands
    • Polarisation of market towards premium and value unaffected by COVID-19
    • COVID-19 leads to a realignment of channel spend
      • Figure 4: UK car dealers: recorded above-the-line, online display and direct mail total advertising expenditure, by media type, 2019-20
    • COVID-19 pandemic sees restricting and investment in online sales capabilities
    • The consumer
    • Continued presence of COVID-19 set to delay recovery of market
      • Figure 5: Non-essential spending, May 2020-January 2021
    • Opportunities could come from those who aren’t car owners
      • Figure 6: Car ownership, November 2020
    • Dominance of used cars poses challenges for new car retailers
      • Figure 7: Age of car owned, November 2020
    • Age and income are key barriers to car ownership
      • Figure 8: Other access to cars, November 2020
    • Young adults offer online sales opportunities
      • Figure 9: Where last car was purchased, November 2020
    • New car owners hold best prospects for sales in the short term
      • Figure 10: Intention to purchase a car in the next three years, November 2020
    • Sales to those in urban areas offer a good short-term opportunity
      • Figure 11: Timescale for purchasing a car in the next three years, November 2020
    • Sellers need to target wealthy individuals to maximise prospects
      • Figure 12: Likelihood of new or used purchase, November 2020
    • Addressing costs of hybrid and electric cars should broaden demand
      • Figure 13: Preference for future fuel types, November 2020
    • Digital communication is important for potential buyers
      • Figure 14: Sources of information, November 2020
    • Older women offer opportunities for dealers and garages
      • Figure 15: Online versus face-to-face purchasing, November 2020
  3. Issues and Insights

    • Not all sectors of the market will recover at the same pace
    • Will online finally become an accepted way for purchasing?
    • AFV revolution is still someway off
  4. The Market – Key Takeaways

    • After falling again in 2020 hopes are for stronger sales in 2021
    • Smaller format cars grow share of sales as overall demand falters
    • Demand for AFVs set to expand further
    • Online sales are also starting to become normalised
    • Impact on use of public transport during COVID-19 brings about opportunities for cars
  5. Market Size and Forecast

    • Car sales badly affected by COVID-19 pandemic
      • Figure 16: Short, medium and long term impact of COVID-19 on car purchasing, February 2021
    • Purchasing suffers as COVID-19 compounds difficulties following the Brexit vote
    • 2021 offers hope with vaccinations and EU trade agreement
      • Figure 17: UK new and used car sales, by volume, 2015-25 (prepared on 12 February 2021)
      • Figure 18: UK new and used car sales, by volume, 2015-25 (prepared on 12 February 2021)
    • New cars set to see stronger growth as demand recovers
      • Figure 19: New car sales, by new and used, 2020-25
    • Market drivers and assumptions
      • Figure 20: Key drivers affecting Mintel’s market forecast, 2015-25 (prepared on 9 February 2021)
    • Learnings from the last recession
      • Figure 21: new car registrations, by volume, 2007-12
    • Forecast methodology
  6. Market Segmentation

    • Demand for new and used cars has been in decline since 2017
      • Figure 22: New and used car market volumes (United Kingdom), million units, 2015-20
    • Private and business/fleet sales have both been hit by poor sales
      • Figure 23: UK new registrations of cars, 2015-20
    • England remains main market for car sales
      • Figure 24: New car registrations, by region, United Kingdom, 2015-19
    • Personal vehicle registrations in decline
      • Figure 25: New car registrations, by keeper, Great Britain, 2015-19
    • Dual and multipurpose vehicles increase in popularity
      • Figure 26: New car registrations, by broad category (volume share), 2015 and 2020
    • Smaller format cars benefit as sales slump during 2020
      • Figure 27: New car registrations, by category (volume share), 2019-20
    • Private buyers prefer smaller cars
      • Figure 28: New car registrations, by buying group and category (volume), 2020
    • Growing number of buyers opt for AFVs …
      • Figure 29: Sales of new cars by fuel type, 2015-20
    • … with battery electric car sales performing the strongest
      • Figure 30: Hybrid and electric car new registrations, by type (United Kingdom), by volume, 2015-20
  7. Channels to Market

    • Franchised dealers dominate
      • Figure 31: Sales of cars, by channel, 2016-20
    • New car market dominated by franchised dealers
      • Figure 32: Sales of new cars, by channel, 2020
    • COVID-19 brings about changes within the used car sector
      • Figure 33: Sales of used cars, by channel, 2020
    • Fall in manufacturer sales points mirrors that of new car sales
      • Figure 34: Number of UK franchised dealer outlets, 2015-20
    • Established manufacturers suffer some of the biggest falls in sales points
      • Figure 35: Percentage change in sales points, top 10 as of 2020, 2015-20
    • Sytner performs well as it strengthens its lead over its rivals
      • Figure 36: Top 10 main dealership groups in the UK, by turnover, 2016 and 2019
    • Car Shops are the best performing of the leading independents
      • Figure 37: Top 10 independent dealership groups in the UK, by turnover, 2016/17 & 2018/19
    • Online fails to make an impact …
    • … although this may change after COVID-19
  8. Market Drivers

    • Brexit agreement should assist car sector beyond 2020
    • Consumer confidence impacted during 2020 by the COVID-19 pandemic
      • Figure 38: Consumer financial confidence, January 2020-January 2021
    • Cost pressures for car owners have moderated recently
      • Figure 39: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2015-19
    • Insurance costs continue to fall …
      • Figure 40: Average premium for comprehensive car insurance policies, 2015-20
    • … with mixed messages when it comes to lending
      • Figure 41: Value of advances (£m) on sales of all cars bought on finance by consumers at point of sale, 2015-20
    • Public transport suffers from lockdowns and increase in working at home
      • Figure 42: Use of selected transport modes (Great Britain), 1 March – 31 December 2020
    • Taxi and private hire sector seeing growth
      • Figure 43: Total licensed taxi and private hire vehicles (England and Wales), 2015-20
    • Private car rental underperforms …
      • Figure 44: UK private short-term car rental, by volume, 2014-19
    • … while car sharing benefits from growth
      • Figure 45: Car club vehicle and membership growth, 2015-20
    • Other alternatives are also available
  9. Companies and Brands – Key Takeaways

    • Buyers continue to move towards premium and value continues despite COVID-19
    • Online benefits as COVID-19 depresses promotional support
    • COVID-19 further exposes the need to relevant strategies
  10. Market Share

    • UK car buyers increasingly want something different
      • Figure 46: Manufacturer shares of new car registrations, 2014-20
    • Superminis are proving increasingly popular with buyers
      • Figure 47: Top 10 new car models, 2018-20
    • Fragmentation evident amongst used car brands
      • Figure 48: Top 10 used car models, 2018-20
  11. Competitive Strategies

    • Online proving of interest to both existing and new players
    • Motordepot offers stronger environmental credentials
    • Offering something more from a dealership
    • COVID-19 forces some large dealers to restructure …
    • … although not all …
    • … with Pendragon also addressing a re-brand
  12. Advertising and Marketing Activity

    • ‘Cazoo’ effect boosts investment during 2020
      • Figure 49: Recorded above-the-line, online display and direct mail total advertising expenditure by UK car dealers, 2016-20
    • Spring lockdown during 2020 pushes back dealer investment
      • Figure 50: Recorded above-the-line, online display and direct mail total advertising expenditure by UK car dealers, monthly share of annual expenditure, 2019 and 2020
    • Online retailers boost investment as others retreat
      • Figure 51: Leading UK car dealers: Recorded above-the-line, online display and direct mail total advertising expenditure, 2016-20
    • COVID-19 alters communication strategies
      • Figure 52: UK car dealers: recorded above-the-line, online display and direct mail total advertising expenditure, by media type, 2019-20
  13. The Consumer – Key Takeaways

    • New lockdowns raise concerns about impact of COVID-19 on expenditure
    • Targeting the quarter of adults who aren’t car owners shouldn’t be overlooked
    • Sellers should ensure that they have a strong used focus
    • Addressing issue of price could stimulate those without a car
    • Under-25s should be targeted to help develop online purchasing
    • New car owners hold best prospects for sales in the short term
    • Costs limit interest in hybrid and electric technologies for some
    • Potential buyers are most likely to rely on digital sources for information
    • Dealers and garages can exploit their popularity with older women
  14. Impact of COVID-19 on Consumer Behaviour

    • Some evidence of increased concerns as third lockdown hits …
    • … although key buying groups continue to be less affected
      • Figure 53: Worries about risk of exposure to COVID-19, March 2020-January 2021
    • Slight increase in those shunning non-essential spending
      • Figure 54: Non-essential spending, May 2020-January 2021
  15. Car Ownership

    • Three quarters of adults are car owners
      • Figure 55: Car ownership, November 2020
    • Income is a major factor affecting car ownership
    • Car purchase opportunities increasingly come from existing owners
      • Figure 56: Car ownership, 2016-20
  16. Age of Car Owned

    • Purchasing used is currently preferred over new
      • Figure 57: Age of car owned, November 2020
    • Older adults less likely than other groups to have purchased recently
    • Men are important buyers of new cars
    • Income plays a major role in the new car market
    • New cars are popular for city dwellers
    • Slowdown in demand for new cars is increasingly evident
      • Figure 58: Age of car owned, 2016-20
  17. Other Access to Cars

    • Most non-car owners don’t have a driving licence
      • Figure 59: Other access to cars, November 2020
    • Young adults are most likely to not hold a driving licence…
    • …with income also a factor
    • Potential market for car purchasing is significant
  18. Where Last Car Was Purchased

    • Majority of cars have been purchased at main dealers
      • Figure 60: Where last car was purchased, November 2020
    • Older adults strongly favour franchised dealers
    • Those on lowest incomes attracted towards private sellers
    • Car supermarkets – an urban experience?
    • Under-25s are a key target for those seeking to develop online
    • Owners of new cars favour franchised dealers
    • No evidence of dealers falling out of favour with car buyers
      • Figure 61: Where last car was purchased, 2017-20
  19. Car Purchasing Intentions

    • Strong intention to purchase a car in the next three years
      • Figure 62: Intention to purchase a car in the next three years, November 2020
    • Wealth is a major factor affecting purchasing intentions
    • Young men and older women illustrate complexity of the market
    • Families shouldn’t be overlooked
    • Owners of new cars bought within the last 2 years offer best prospects overall
    • Past purchasers from franchised dealers ready to buy again
    • Little change in purchase intentions since 2019
      • Figure 63: Intention of purchasing a car/s in the next three years, 2017-20
    • Concerns colour purchasing plans for many
      • Figure 64: Timescale for purchasing a car in the next three years, November 2020
    • Older buyers look to delay on purchasing
    • City buyers present a good short-term opportunity
    • Targeting wealthy buyers also shouldn’t be overlooked
    • New car owners represent the best short-term prospects
    • Short-term plans for purchasing a car have fallen back
      • Figure 65: Timescale for purchasing a car in the next three years, 2017-20
    • Nearly half of potential buyers want to buy new
      • Figure 66: Likelihood of new or used purchase, November 2020
    • Wealth favours the purchase of a new car
    • Older men and younger women have different demands
    • New and used car owners continue with their preferences
    • Used cars remain an increasingly popular choice for buyers
      • Figure 67: Intention of purchasing a car/s in the next three years, 2017-20
  20. Preference for Fuel Types

    • Hybrid technology is increasingly the main challenger to petrol
      • Figure 68: Preference for future fuel types, November 2020
    • Men are more likely to have a preference towards a particular fuel
    • Very youngest adults aren’t the most important market for new fuels
    • New technologies of greatest interest to new car buyers
    • Hybrid and electric fuels see surge in interest
      • Figure 69: Preference for future fuel types, 2017-20
  21. Sources of Information

    • Digital is preferred by potential buyers
      • Figure 70: Sources of information, November 2020
  22. Online versus Face to Face Purchasing

    • Online is preferred for undertaking research
      • Figure 71: Online versus face-to-face purchasing, November 2020
    • Online has a big role for middle aged adults
    • Role for dealers and garages to help older women
    • New cars owners prefer to deal with dealers
    • Dealers well positioned for new car owners looking for assistance
  23. Appendix – Data Sources, Abbreviations and Supporting Information

    • Data sources
    • Exclusions
    • Market sizing and segment performance
    • Abbreviations
    • Consumer research methodology

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