Table of Contents
Executive Summary
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- Impact of COVID-19 on vehicle recovery
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- Figure 1: Short, medium and long-term impact of COVID-19 on the automotive category and vehicle recovery market, September 2020
- The market
- Revenue growth has slowed with market maturity
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- Figure 2: Market size and forecast for the vehicle recovery market, 2015-25
- Memberships set to fall back in 2020
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- Figure 3: UK vehicle recovery market, membership, 2015-20
- Regular memberships dominate the sector
- Growth in indirect sales has impacted average policy value
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- Figure 4: Average premium paid, 2015-20
- Traditional vehicle recovery policies dominate the market
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- Figure 5: Segmentation of the vehicle recovery market (value), by policy type, 2019
- A third of policies are now purchased indirectly
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- Figure 6: Segmentation of the vehicle recovery market (value), by direct/indirect channels, 2019
- A collapse in car sales will badly impact the vehicle recovery sector during 2020
- Companies and brands
- Recovery market is dominated by three big players
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- Figure 7: Company shares of the vehicle recovery market, by membership and value, 2020
- Both price and non-price marketing is evident in the market
- Major players seek to develop income streams
- Promotional investment has been expanding in recent years
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- Figure 8: Total above-the-line, online display and direct mail advertising expenditure on breakdown recovery, 2015-19
- The consumer
- AA is well positioned with a broad customer base
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- Figure 9: Ownership of breakdown cover, by recovery organisation, June 2020
- Companies need to look beyond price
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- Figure 10: Factors considered when selecting a provider of breakdown cover, June 2020
- Multiple ways of reaching consumers are essential
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- Figure 11: Key means by which current breakdown cover for your main vehicle was acquired, June 2020
- Company websites are important for those going online
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- Figure 12: Use of online channels, June 2020
- New types of policy shouldn’t be ignored
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- Figure 13: Preferences towards policy style, June 2020
- Adding value offers opportunity for the development of premium policies
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- Figure 14: Attitudes towards vehicle recovery policies, June 2020
- Not forgetting the basics shouldn’t be overlooked
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- Figure 15: Level of service sought, June 2020
The Impact of COVID-19 on Vehicle Recovery
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- Impact on the market
- Revenues set to slump as COVID-19 impacts
- Average premiums boosted as the profile of Business-to-Consumer sales increases
- Online sales expected to benefit from COVID-19
- Impact on companies and brands
- Focus on B2C set to benefit smaller competitors
- Tactical price competition might return to the market
- Promotional expenditure down in 2020
- Impact on consumers
- A new role for the car?
- Downtrading could bring opportunities for smaller service providers
Issues and Insights
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- Business-to-Consumer sales are an important opportunity
- Smaller companies are set to find the market increasingly challenging
- Can the market learn from the digital sector and flex the level of service offered?
The Market – Key Takeaways
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- COVID-19 expected to have a relatively minimal impact
- Distress purchase of policies represents a small but valuable market
- Average policy value is growing
- No change in the dominance for free and bundled policies
- Wider impact of COVID-19 on expenditure cannot be overlooked
Market Size and Forecast
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- COVID-19 has an indirect impact on the vehicle recovery market
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- Figure 16: Short, medium and long-term impact of COVID-19 on automotive category and vehicle recovery market, September 2020
- Lockdown
- Re-emergence
- Recovery
- Maturity increasingly impacts on revenues
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- Figure 17: Market size and forecast for the vehicle recovery market, 2015-25
- Membership approaches 32 million prior to COVID-19
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- Figure 18: UK vehicle recovery market, membership, 2015-20
- Revenue growth has been buoyant since 2016
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- Figure 19: Market size and forecast for the vehicle recovery market, 2015-25
- Market drivers and assumptions
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- Figure 20: Key drivers affecting Mintel’s market forecast, 2015-25 (prepared on 5 August 2020)
- Learnings from the last recession
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- Figure 21: The vehicle recovery market, by value, 2007-12
- Forecast methodology
Market Segmentation
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- Revenues dominated by sale of regular membership policies
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- Figure 22: Segmentation of the vehicle recovery market, by value, at current prices, 2015-20
- Sluggish growth in average policy value as indirect business grows
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- Figure 23: Average premium paid, 2015-20
- Majority of policies offer comprehensive benefits
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- Figure 24: Segmentation of the vehicle recovery market (value), by policy type, 2019
- A third of policies are now purchased indirectly
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- Figure 25: Segmentation of the vehicle recovery market (value), by direct/indirect channels, 2019
Channels to Market
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- Free and bundled policies dominate the market
- Telephone and face-to-face have limited appeal
- COVID-19 expected to boost profile of online
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- Figure 26: Key channels used for purchasing breakdown recovery insurance, 2014, 2016, 2018 and 2020
Market Drivers
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- GDP growth has been slowing since 2014
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- Figure 27: Real GDP (actual and forecast), 2010-24
- COVID-19 set to impact on expenditure plans…
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- Figure 28: The financial activity index, January 2015-July 2020
- …with the automotive sector set to suffer a short-term shock
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- Figure 29: New and used car market volumes, 2015-20
- Long-term prospects for automotive sector appear good
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- Figure 30: Intention to purchase a car in the next three years, November 2019
- Private sales have been dragging down new car volumes
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- Figure 31: UK new registrations of cars, 2015-20
- Growth in the number of older cars on the road provides opportunities
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- Figure 32: Age structure of the UK car parc in years, 2015-19
- Multiple car ownership is expanding
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- Figure 33: Percentage of households with car availability, England, 2009-19
- No change in IPT rate since 2017
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- Figure 34: Insurance premium tax rates, 1997-2020
- Costs pressures for car owners have moderated since 2018
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- Figure 35: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2015-19
- An ageing population should offer benefits for those who want assistance
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- Figure 36: Trends in the age structure of the UK population, 2015-25
Companies and Brands – Key Takeaways
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- Working with business and consumer segments is essential
- Competition has led to price and non-price approaches
- Service development and technology are both seeing interest
- AA drives forward promotional spend while the RAC reduces investment
- With quality and trust key features for the AA and RAC, smaller competitors need to look elsewhere
Market Share
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- Competition is growing for the big three
- RAC is increasingly a rival for the AA when it comes to memberships
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- Figure 37: Company shares of the vehicle recovery market, by membership, 2014-20
- Call Assist leads smaller players in the market
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- Figure 38: Share of others in the market, by UK membership, 2016-20
- AA dominates the market by revenue
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- Figure 39: Company shares of the vehicle recovery market, by value, 2014-20
Competitive Strategies
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- Competition breeds desire to be different
- Financial promotions remain popular with the big three…
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- Figure 40: Price based offers from vehicle recovery companies, August 2020
- …as others major on non-price factors
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- Figure 41: Non-price communication from vehicle recovery companies, August 2020
- Service differentiation increasingly employed as a way of standing out…
- …as is building a package through matrix pricing
- Low-risk customers can benefit from discounts
- Savings can be made by looking at different ways of paying for assistance
- AA and RAC are strongly positioned for partnerships
- Green Flag is a notable challenger in the financial sector
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- Figure 42: Packaged current accounts that offer breakdown cover, August 2020
- Retail market sees a variety of different providers
Launch Activity and Innovation
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- AA broadens services beyond breakdown…
- …with a similar strategy being pursued by the RAC
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- Figure 43: RAC Come and Go i-Rotate car seat, October 2019
- RAC partners with app-based insurance company Wrisk…
- …as the AA works with what3words to assist in locating drivers
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- Figure 44: AA partners with what3words, December 2019
Advertising and Marketing Activity
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- Investment more than doubles between 2015 and 2019
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- Figure 45: Total above-the-line, online display and direct mail advertising expenditure on breakdown recovery, 2015-19
- Spring is a key period for advertising…
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- Figure 46: Recorded above-the-line, online display and direct mail total advertising expenditure on breakdown recovery, by month, 2018 and 2019
- …although COVID-19 has disrupted activity during 2020
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- Figure 47: Total above-the-line, online display and direct mail advertising expenditure on breakdown recovery, January to June 2020
- AA dominates advertising revenues
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- Figure 48: Recorded above-the-line, online display and direct mail total advertising expenditure on breakdown recovery, by advertiser, 2015-19
- Television is overwhelmingly preferred over other media
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- Figure 49: Recorded above-the-line, online display and direct mail total advertising expenditure on breakdown recovery, by media type, 2019
- Nielsen Ad Intel coverage
Brand Research
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- AA leads on trust while AXA and LV=Britannia have strong differentiation
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- Figure 50: Differentiation and trust towards selected brands, July 2020
- Key brand metrics
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- Figure 51: Key metrics for selected brands, July 2020
- Brand attitudes: key brands reflect specific attitudes
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- Figure 52: Attitudes, by brand, July 2020
- Brand personality: All three big players have similar personalities
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- Figure 53: Brand personality – macro image, July 2020
- Micro personalities suggest differentiation
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- Figure 54: Brand personality – micro image, July 2020
The Consumer – Key Takeaways
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- Consumer confidence is strengthening
- AA benefits from its popularity with a broad range of consumers
- Looking beyond price is essential for smaller companies
- Online is likely to benefit from its popularity during the recent COVID-19 pandemic
- Improving awareness is essential for smaller companies
- New types of policy have the potential to attract new customers
- A focus on added value offers the opportunity of offering a premium service
- Offering the basics shouldn’t be overlooked
Impact of COVID-19 on Consumer Behaviour
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- Consumers are becoming less worried about COVID-19…
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- Figure 55: Worries about risk of exposure to COVID-19, April-August 2020
- …with financial confidence strengthening
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- Figure 56: Financial situation, May and July 2020
- Rise in online and click-and-collect suggests a different role for the car
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- Figure 57: Shopping habits, April-August 2020
Presence of Breakdown Recovery Organisations
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- AA leads the market
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- Figure 58: Ownership of breakdown cover, by recovery organisation, June 2020
- AA benefits from its broad appeal amongst different age groups
- Young adults are a key target for all in the market
- AA’s maintains its position of dominance
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- Figure 59: Ownership of breakdown cover, by recovery organisation, 2015-20
Selecting a Recovery Provider
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- Offering a competitive price is key for many
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- Figure 60: Factors considered when selecting a provider of breakdown cover, June 2020
- Older adults know what they want…
- …with younger adults well placed towards new products and services
- Less affluent adults want more than just a competitive price
- Image is important for young families
- Importance of price for used car owners offers opportunities…
- …with use of reviews and improvements to product range possible strategies
- Buyers are increasingly looking beyond price
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- Figure 61: Factors considered when selecting a provider of breakdown cover, 2017 and 2019
How Cover is Acquired
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- Online is the most important way of acquiring cover
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- Figure 62: Key means by which current breakdown cover for your main vehicle was acquired, June 2020
- Purchase with vehicle insurance attracts the young and less affluent
- Bundling with other products and services important for older and wealthier
- Online appeals to young men
- Online offers an opportunity for owners of used cars
Preferences towards Online Channels
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- Company websites are well positioned to capture more business
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- Figure 63: Use of online channels, June 2020
- Older men are an important target for company websites
- Indirect purchasing stresses the importance of using other methods of promotion
Preferences towards Policy Style
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- Traditional policies continue to prove popular
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- Figure 64: Preferences towards policy style, June 2020
- Young adults show interest in PAYU and reclaim policies
Attitudes towards Vehicle Recovery Policies
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- Around three quarters want discounts
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- Figure 65: Attitudes towards vehicle recovery policies, June 2020
- Young adults are a useful market for added value services
- Income is a major factor for additional services
- Wealthy adults might be attracted towards a super-premium service
- Families offer further opportunities
- Used car owners could be targeted with a low-cost and tech-focused service
- Importance of factors when thinking about vehicle recovery – CHAID analysis
- Adults with children under 18 who live in cities are most interested in personal cover
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- Figure 66: Vehicle recovery – CHAID – Tree output, June 2020
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- Figure 67: Vehicle recovery – CHAID – Table output, June 2020
Level of Service Sought
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- Basic roadside assistance dominates
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- Figure 68: Level of service sought, June 2020
- Older drivers want most support
- Less wealthy favour local assistance
- Looking further afield is an opportunity for city dwellers
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
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