Table of Contents
Issues in the Market
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- Key issues
- Abbreviations
Insights and Opportunities
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- New lending products for the used car market
- Discounted finance on used cars?
- Change consumer attitudes to cash purchasing
- POS finance suppliers may consider going direct
Market in Brief
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- Car finance – a rate sensitive market
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- Figure 1: Value and volume of the car finance market, 2001-07
- An uncertain outlook
- Polarisation in consumer credit quality
- Withdrawal of some direct lenders
- Car dealers need profit, finance companies need penetration
- More product innovation required
- Unsecured lenders start worrying about rising debts
- An opportunity for car manufacturers and dealers?
- Used cars – a missed opportunity
Fast Forward Trends
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- Wiki World
- What's it about?
- What we've seen
- Specifics
- What next?
- No Middleman
- What's it about?
- What we've seen
- Specifics
- What next?
Internal Market Environment
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- Key Points Summary
- Cars – a depreciating asset
- Rising number of cars on the road
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- Figure 2: Number of cars in use (car parc) in the UK, 2001-07
- Figure 3: Cars in use (car parc), 2001-07
- New car registrations
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- Figure 4: Trend in private, business and fleet new car registrations, 2001-07
- Used car sales
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- Figure 5: Used car sales, 2001-07
- Figure 6: Retail new and used car sales (units), 2001-07
- Over-production, residual values and nearly-new cars
- Part exchange and the funding gap
- Car pricing and car finance
- Discounted manufacturer finance
- Captive finance market
- Rate headlining
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- Figure 7: Actual personal loan rates paid compared with advertised rates, Feb-June 2005
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- Figure 8: Direct lender personal loan headline APR rates, 13 November 2007
- Changes to the Consumer Credit Act
- Treating customers fairly
Broader Market Environment
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- Key Points Summary
- GDP, consumer expenditure and savings
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- Figure 9: Forecast economic indicators, 2007-12
- Figure 10: Comparison of trend in new car sales and interest rates, 2001-07
- Rising debt levels
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- Figure 11: Consumer credit outstanding and secured borrowings, 1997-2006
- The increasing burden of debt
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- Figure 12: Degree to which consumers are able to cope with bills and credit commitments, 2007
- The distribution of debt
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- Figure 13: Percentages of households with secured and unsecured debt, 1995-2006
- Attitudes towards debt and further borrowing
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- Figure 14: Attitudes towards current and future borrowing, 2005 and 2007
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- Figure 15: Attitudes towards current and future borrowing, by gender, age and socio-economic group, March 2007
- Changing consumer attitudes towards debt
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- Figure 16: Agreement with selected financial lifestyle statements, 1993-2006
- Number of IVAs rises sharply
- Confidence linked to interest rates
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- Figure 17: Bank base rate and consumer confidence, 1982-2007
- Sub-prime threat to motor finance
- Decline in acceptance rates
Competitive Context
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- Key Points Summary
- Car purchasing methods
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- Figure 18: Car financing, July 2007
- Remortgaging and mortgage equity release
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- Figure 19: Reasons for releasing equity, February 2007
- Secured lending
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- Figure 20: Reasons for taking out a secured loan, December 2006
- Cash savings and investment products
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- Figure 21: Individual trusts’ private sector holding of Sterling assets, 2001-05
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- Figure 22: Current account and savings product ownership, October 2006
- Figure 23: Savings product ownership, by gender, age and socio-economic group, October 2006
Strengths and Weaknesses in the Market
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- Strengths
- Weaknesses
Who’s Innovating?
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- Key Points Summary
- A lack of product innovation
- Motor loans and voluntary termination
- Pay-for-use finance
- Innovation in personal loans
- Cash-back loans
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- Figure 24: Annual moneyback payment, according to loan size, November 2007
- Speed and convenience
- Flexibility becoming more important
- Social lending
- Training to arrest decline in dealer finance
- Risk-based pricing on the way
Trade Perspective
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- Motor finance – an uncertain future
- The general market outlook
- Fears about the consumer
- Fears about the trade
- Low margins cannot be sustained
- Direct lenders suffering too
Market Size and Forecast
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- Key Points Summary
- How cars are financed
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- Figure 25: Car financing method by new and second-hand car ownership, July 2007
- Total car finance market worth £30.8 billion
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- Figure 26: Car finance market size by value and volume, 2001-07
- Figure 27: Car finance market average agreement value, 2001-07
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- Figure 28: Comparison of trend in car finance agreements and interest rates, 2001-07
- Market segmentation
- Car dealer finance
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- Figure 29: Car dealer finance market size by value and volume, 2001-07
- Figure 30: Car dealer finance average agreement value, 2001-07
- Direct lending – secured and unsecured finance for car purchasing
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- Figure 31: Direct lending car purchase finance (secured and unsecured) market size by value and volume, 2001-07
- Figure 32: Direct lending car purchase finance (secured and unsecured) average agreement value, 2001-07
- The balance is shifting
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- Figure 33: Proportion of car finance agreements/transactions accounted for by secured and unsecured lending, 2007
- Unsecured finance products
- Secured finance products
- Finance penetration
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- Figure 34: Trend in private, business and fleet new car registrations and finance penetration, 2001-07
- Forecast
- Market set to stagnate over the next five years
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- Figure 35: Forecast car finance market segments and total Car finance market, 2001-2012
- Factors used in the forecast
Segment Performance
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- Key Points Summary
- Share of market volume
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- Figure 36: Market share of dealer finance and other lending for car purchases (number of agreements), 2001-07
- Share of market value
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- Figure 37: Market share of dealer finance and other lending for car purchases (market value), 2001-07
Market Share
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- Key Points Summary
- Personal loans
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- Figure 38: Personal loan market share by company, August 2007
- The ‘big five’ cater for half of the market
- Car dealer finance
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- Figure 39: Estimated manufacturer and independent finance company share of new and used car finance market (number of cars financed), 2007
- New car finance
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- Figure 40: Estimated finance company brand shares of the new car finance market (unit sales), 2007
- Used car finance
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- Figure 41: Estimated finance company brand shares of the used car finance market (unit sales), 2007
Companies and Products
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- Key Points Summary
- Vehicle manufacturer finance companies
- FCE Bank plc
- GMAC Financial Services
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- Figure 42: GMAC’s retail car finance products, by vehicle brand, 2007
- Volk Volkswagen Financial Services (UK)
- Other leading players
- Independent motor finance companies
- Black Horse Motor Finance
- Capital Bank Motor
- GE Money Motor Finance
- Direct lenders
- High street banks
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- Figure 43: Top five major British banking groups and selected subsidiaries, 2006
- Recent entrants
- Market developments
Brand Communication and Promotion
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- Key Points Summary
- Overall personal loan adspend
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- Figure 44: Personal loan adspend, 2003-07
- Vauxhall top the list of advertisers
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- Figure 45: Car manufacturer finance adspend, 2003-07
- Contract plan adspend slumps
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- Figure 46: Personal Contract Plans adspend, 2003-07
- TV the key medium
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- Figure 47: Media types used (personal contract plans and car manufacturer finance), year to June 2007
Channels to Market
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- Key Points Summary
- Larger number of outlets for unsecured personal loans
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- Figure 48: Number of outlets for car finance and personal loans, 2007
- Growing use of Internet for personal loans
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- Figure 49: Use of remote channels in arranging a loan, 2005 and 2006
The Consumer – Car Ownership and Financing
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- Key Points Summary
- Car ownership
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- Figure 50: Car ownership, July 2007
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- Figure 51: Car ownership, by gender, age, socio-economic group and marital status, July 2007
- Treating yourself to a new car
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- Figure 52: Car ownership, by lifestage, special group, working status and gross annual household income, July 2007
- Londoners letting the train take the strain
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- Figure 53: Car ownership, by TV region, technology usage, Internet usage and newspaper readership, July 2007
- A discount for cash?
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- Figure 54: Car financing methods, July 2007
- Money goes to money
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- Figure 55: Car financing, by gender, age, socio-economic group and marital status, July 2007
- Cash popular at the margins
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- Figure 56: Car financing, by lifestage, special group, working status and gross annual household income, July 2007
- Retirees driving the South West’s cash market?
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- Figure 57: Car financing, by TV region, technology usage, Internet usage and newspaper readership, July 2007
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- Figure 58: Car financing method, by new and second-hand car ownership, July 2007
The Consumer – Key Product Features
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- Key Point Summary
- Reluctance to turn to finance
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- Figure 59: Important features of finance arrangement/borrowing for car purchase, July 2007
- Traditional attitudes live on
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- Figure 60: Important features of finance arrangement/borrowing for car purchase, by gender, age, socio-economic group and marital status, July 2007
- Pre-family look for predictability
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- Figure 61: Important features of finance arrangement/borrowing for car purchase, by lifestage, special group, working status and gross annual household income, July 2007
- Internet users – picking and choosing
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- Figure 62: Important features of finance arrangement/borrowing for car purchase by TV region, technology usage, Internet usage and newspaper readership, July 2007
- Paying more interest to the rates
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- Figure 63: Important features of car finance by new, second-hand and intended car ownership, July 2007
The Consumer – Attitudes and Targeting Opportunities
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- Key Point Summary
- Scoping the market
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- Figure 64: Consumer attitudes towards car finance, July 2007
- Borrowing – but not from the dealers
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- Figure 65: Most popular attitudes towards car finance, by gender, age, socio-economic group and marital status, July 2007
- Getting the discounts from the dealers
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- Figure 66: Next-most popular attitudes towards car finance, by gender, age, socio-economic group and marital status, July 2007
- Finance a commodity product for high earners
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- Figure 67: Most popular attitudes towards car finance, by lifestage, special group, working status and gross annual household income, July 2007
- Pre-family – the new targets?
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- Figure 68: Next-most popular attitudes towards car finance, by lifestage, special group, working status and gross annual household income, July 2007
- The limitations of selling online
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- Figure 69: Most popular attitudes towards car finance, by TV region, technology usage, Internet usage and newspaper readership, July 2007
- Scope for Scotland?
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- Figure 70: Next-most popular attitudes towards car finance, by TV region, technology usage, Internet usage and newspaper readership, July 2007
- Making the most of the dealership
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- Figure 71: Attitudes towards car finance arrangements by new, second-hand and intended car ownership, July 2007
- From Conservative to Not Bothered
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- Figure 72: Attitudes towards car finance arrangements by new, second-hand and intended car ownership, July 2007
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- Figure 73: Attitudes towards car finance arrangements by target group, July 2007
- Prospects for new sales among the Conservatives
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- Figure 74: Car ownership, by target group, July 2007
- A fifth of Happy Borrowers turn to personal loans
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- Figure 75: Means of funding car purchase, by target group, July 2007
- Engagement high among Happy Borrowers
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- Figure 76: Key product features, by target group, July 2007
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