The COVID-19 pandemic appears to have hit business and fleet purchases more than those from private individuals. Data from the SMMT records a 29% fall in volumes between 2019 and 2020 compared to a weaker 26.5% decline for private purchases. Yet the fall in demand from both markets illustrates the wide impact that the pandemic has had on confidence and the willingness of individuals and the commercial sector to purchase. Neither can be guaranteed for a quick recovery in sales.

Future purchasing plans have also been badly affected by the COVID-19 pandemic. After combined new and used car sales dropped by 18.3% between 2019 and 2020 to 8.17 million units, recovery for the sector is forecast to be slow. Sales are forecast to advance by only 11.5% in 2021 and reach their 2019 level by 2023. Changes in purchasing plans provide an indication of why there has been this fall. Amongst those planning to buy in the coming 3 years, those planning to purchase in the next 6 months were 24% in November 2018 yet had dropped to 18% by November 2020.

Despite the expected short-term impact of the COVID-19 pandemic on social distancing and personal safety, there appears a long-term trend towards shared access to cars. Car clubs are one of the most obvious developments with membership growing in recent years and surpassing in excess of 550,000 by early 2020. Equally, use of other ways of accessing personal transport are expanding with the number of private hire licences increasing by 45.5% between 2015 and 2020. For those selling cars, dealing with these and other challenges are only likely to grow.

Interest in smaller cars appear to be growing. After a period when this sector has been under threat from rising interest in SUVs (Sports Utility Vehicles), there is recent evidence of a return to growth. Analysis of new car sales between 2019 and 2020 record a rise in supermini and lower medium formats with their combined share ahead 2.1 percentage points. Some of this is likely to be driven by the growing popularity of AFVs (Alternative Fuelled Vehicles) many of which are offered as smaller format vehicles. With Mintel expecting demand for AFVs to grow further, and more product launches expected from manufacturers, further growth in demand for smaller vehicles is set to continue.

• 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.

This update was prepared on 23 February 2021.

The first COVID-19 cases were confirmed in the UK at the end of January 2020, with a small number of cases in February. Rapidly rising case numbers led to the first national lockdown, starting on 23 March. It wasn't until 15 June that non-essential stores were allowed to re-open, followed by pubs, restaurants, hotels and hairdressers on 4 July, and many beauty businesses on 13 July.

By September, it had become clear that the UK was at the start of a second Wave, and social distancing measures were intensified. Continued increases in infection numbers led to Wales implementing a two-week national lockdown from 19 October, England announcing a month-long lockdown from 5 November, and Scotland introducing a new five-level system of coronavirus restrictions.

Despite these restrictions, however, case numbers continued to increase. All four UK nations tightened restrictions in January 2021, effectively leading to a full UK-wide lockdown.

On 22 February, Boris Johnson announced the roadmap to an easing of restrictions in England, starting with the re-opening of schools on 8 March, followed by easing of restrictions on outdoor gatherings on 29 March, and with a hoped end to all restrictions by 21 June. The Welsh and Scottish governments also gave more details on their plans to ease restrictions, with both nations taking a slightly more cautious approach to the one planned for England.

The UK’s vaccination programme started on 8 December 2020, and with the Pfizer-BioNTech, Moderna and Oxford-AstraZeneca vaccines licenced for use in the UK, the government aims to offer a first dose of the vaccine to 32 million people by mid-April.

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its November 2020 Fiscal Sustainability Report. The scenario suggests that UK GDP will have fallen by 11.3% in 2020, recovering by 5.5% in 2021, and 6.6% in 2022. GDP isn’t expected to return to pre-COVID levels until the fourth quarter of 2022. The central scenario has unemployment peaking at 7.5% in Q2 2021.

The current uncertainty means that there is wide variation on the range of forecasts, however, and this is reflected in the OBR’s own scenarios. In its upside scenario, economic activity returns to pre-COVID-19 levels by Q4 2021. Its more negative scenario, by contrast, would mean that GDP doesn’t recover until Q3 2024.

The second Wave of infections and subsequent lockdowns means that the short-term prospects for the country are consistent with the OBR’s negative scenario, but this needs to be balanced against the fact that the vaccine rollout is ahead of even the OBR’s central scenario. Medium- to long-term, then, we are still basing our forecasts and market analysis on the OBR’s central economic scenario.

This Report investigates the car buying process and the retailing of cars. It focuses on both new and used car sales to private individuals, although for the purposes of market context, it also includes car sales to other markets such as business and fleet. It is exclusively focused on passenger vehicles, and therefore excludes any discussion of the market for light commercial vehicles.