Table of Contents
Issues in the Market
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- Key issues
- Definitions
Future Opportunities
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- Banking green – driving green?
- Trading Up, Trading Down, Trading Over
- Rebuilding trust and taking business from the high street
- Still a need to challenge assumptions
Market in Brief
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- Sales of car finance continue to fall…
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- Figure 1: Car finance market size, by value and volume, 2003-09
- … and have fallen faster than the number of new and used car sales
- A tough automotive market…
- … and difficult times for consumers
- Banks and manufacturers dominate the market…
- … while consolidation has reduced the number of active players
- Replacement intentions fall sharply
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- Figure 2: Car ownership, July 2007-June 2009
- Cash buyers dominate the motor market…
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- Figure 3: Car financing methods, June 2009
- …and are likely to continue to do so
Internal Market Environment
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- Key points
- Growth rate of cars in use slows
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- Figure 4: Number of cars in use (car parc) in the UK, 2003-09
- Decline in new car registrations
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- Figure 5: Trend in private, business and fleet new car registrations, 2003-09
- Used car sales begin to fall
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- Figure 6: Used car sales, 2003-09
- Figure 7: Mew retail and used car sales, 2003-09
- Car purchase prices and car finance
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- Figure 8: Expected cost of car purchase, new and second-hand, December 2008
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- Figure 9: Expected method of payment for next car, new and second-hand, December 2008
- Lending rates – advantage POS
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- Figure 10: Unsecured bank and building society lending rates and finance house base rate, August 2007-July 2009
- Falling acceptance rates?
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- Figure 11: Consumer credit* applications and acceptance rates, Jan 2009-Jul 2009
Broader Market Environment
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- Key points
- Economic factors
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- Figure 12: Forecast economic indicators, 2004-14
- Base rates fall to all-time lows…
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- Figure 13: Base rate, January 2000-July 2009
- … but personal loan interest rates rise
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- Figure 14: Average personal loan rates, May 2007-May 2009
- Bankruptcy and IVAs
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- Figure 15: Individual insolvencies in England and Wales, 2004-09
- Much higher levels of debt in this recession
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- Figure 16: Consumer credit, amounts outstanding, 2003-08
- The post-recession bounce-back
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- Figure 17: Rate of change in total consumer spending and consumer spending on cars, 1989-99
- Debt management
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- Figure 18: Current financial position, by types of credit outstanding, April 2009
- Figure 19: Current financial position, April 2009
- Financial lifestyle
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- Figure 20: Agreement with selected financial lifestyle statements, 2003-09
Strengths and Weaknesses
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- Figure 21: Car finance – SWOT analysis, 2009
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Market Size and Forecast
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- Key points
- Total car finance market falls to £21.9 billion
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- Figure 22: Car finance market size, by value and volume, 2003-09
- Figure 23: Comparison of trends in car finance agreements and interest rates, 2003-09
- Stagnation in average values
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- Figure 24: Car finance market average agreement value, 2003-09
- Market segmentation
- Car dealer finance (POS)
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- Figure 25: Car dealer finance market size, by value and volume, 2003-09
- Figure 26: Car dealer finance average agreement value, 2003-09
- Direct lending car finance
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- Figure 27: Direct lending car purchase finance (secured and unsecured) market size, by value and volume, 2003-09
- Figure 28: Direct lending car purchase finance (secured and unsecured) average agreement value, 2003-09
- Finance penetration
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- Figure 29: Trend in private, business and fleet new car registrations and finance penetration, 2003-09
- Figure 30: Comparison of trends in car finance agreements and car sales, 2003-09
- Forecast
- Market to stage a recovery – but it will be a slow process
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- Figure 31: Total car finance market, value and volume, 2003-14
- Dealer finance – time to change direction?
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- Figure 32: Dealer finance market, value and volume, 2003-14
- Direct lending hit hard – but should recover more quickly
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- Figure 33: Direct lending car finance market, value and volume, 2003-14
- Factors used in this forecast
Market Share
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- Key points
- Personal loans
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- Figure 34: Personal loan market share, by brand and type of provider, September 2008
- The ‘big five’ cater for half of the market
- Car dealer finance
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- Figure 35: Estimated manufacturer and independent finance company share of new and used car finance market (number of cars financed), 2008
- New car finance
- Black Horse leads the way in the new car market
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- Figure 36: Estimated finance company brand shares of the new car finance market (unit sales), 2008
- Used car finance
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- Figure 37: Estimated finance company brand shares of the used car finance market (unit sales), 2008
Competitive Context
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- Key points
- Car purchasing methods
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- Figure 38: Car financing methods, June 2009
- Remortgaging and mortgage equity release
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- Figure 39: Housing Equity Withdrawal (seasonally adjusted), Q1 2003-Q1 2009
- Secured loans and further advances
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- Figure 40: Size of the secured lending market, by sector and gross advances, 2003-08
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- Figure 41: Reason for using secured credit products, October 2007 and November 2008
- Savings
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- Figure 42: Ownership of deposit or savings accounts and NS&I products, December 2008
Who’s Innovating?
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- Key points
- Still a lack of product innovation
- The funding conundrum
- Longer ownership cycles
- Deferred finance products
- A new innovation required
- Is revolving credit the solution?
- Service rather than product development
- Innovating for the recession
Companies and Products
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- Key points
- Vehicle manufacturer finance companies
- FCE Bank plc
- GMAC Financial Services
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- Figure 43: GMAC’s retail car finance products, by vehicle brand, 2009
- Volkswagen Financial Services (UK)
- Other leading players
- Independent motor finance companies
- Black Horse Motor Finance
- Santander Consumer Finance
- Other finance companies
- Direct lenders
- A more concentrated market
Brand Communication and Promotion
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- Key points
- Overall car finance adspend down…
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- Figure 44: Topline adspend on car finance and selected lending products, 2006-09
- … and manufacturer adspend has collapsed
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- Figure 45: Adspend by company – motor manufacturer finance, 2006-09
- Spend on contract plans also falls
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- Figure 46: Adspend by company – personal contract plans (motor), 2006-09
- Lloyds dominants unsecured personal loan advertising
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- Figure 47: Adspend by company – unsecured loans, 2006-09
- TV adspend falls in favour of direct mail
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- Figure 48: Media type used by car finance specialists, year to June 2009
Channels to Market
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- Key points
- To go direct to the dealer, or to look elsewhere?
- Distribution dependent on the type of purchase
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- Figure 49: Expected source of purchase of next car, new and second-hand, December 2008
- Total number of dealers could be set to decline
- Banks are the default choice?
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- Figure 50: Likelihood of potential customers to source a loan through their current account provider, September 2008
- Physical distribution channels still important
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- Figure 51: Websites actually purchased from in the last three months (financial products only), Oct 2003-Jul 2008
The Consumer – Car Ownership and Financing
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- Key points
- Widespread ownership – but few are planning to upgrade
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- Figure 52: Car ownership, July 2007-June 2009
- Ownership linked to affluence…
- … and lifestage
- The young and the affluent form the market going forwards
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- Figure 53: Car purchasing intentions, by demographics, June 2009
- Cash, not credit
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- Figure 54: Car financing methods, June 2009
- It’s not the level of credit that differs…
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- Figure 55: Selected car financing methods, by gender, age and socio-economic group, June 2009
- … but the type of credit used
- The cost of homeownership
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- Figure 56: Selected car financing methods, by housing tenure, June 2009
- Personal loans still have a major role to play
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- Figure 57: Purpose of loan, 2009
The Consumer – Attitudes Towards Car Finance
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- Key points
- Savings still top of the list…
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- Figure 58: Consumer attitudes towards car finance, June 2009
- … but are people being realistic?
- ABs avoiding finance for the sake of a better deal?
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- Figure 59: Attitudes towards funding car purchases and cash discounts, by age and socio-economic group, June 2009
- Scope for education among the affluent?
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- Figure 60: Attitudes towards the cost and trustworthiness of dealer finance, by age and socio-economic group, June 2009
- A role to play for multiple car owners?
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- Figure 61: Attitudes towards car finance by number of cars owned, by age and socio-economic group, June 2009
- Signs that a lack of trust is pushing people away from dealer finance?
- Are recent car buyers recognising the benefits of dealer finance?
- How can word of mouth be built?
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- Figure 62: Most popular consumer attitudes towards car finance, by car ownership, June 2009
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- Figure 63: Next most popular consumer attitudes towards car finance, by car ownership, June 2009 (continued)
- Tough sell for those in the marketplace
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- Figure 64: Attitudes towards car finance among potential car buyers, June 2009
The Consumer – Targeting Opportunities
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- Key points
- New cars still key to the finance market
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- Figure 65: Car financing methods, by car ownership, June 2009
- Buying in cash to get a better deal…
- …but what about those who can’t fund a purchase from savings?
- Taking advantage of the new economic climate
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- Figure 66: Most popular car financing methods, by consumer attitudes towards car finance, June 2009
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- Figure 67: Next most popular car financing methods, by consumer attitudes towards car finance, June 2009 (continued)
- Most are strong cash advocates
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- Figure 68: Key consumer groups, June 2009
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- Figure 69: Consumer attitudes to car finance, by target groups, June 2009
- Wheeling and dealing in the second-hand market
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- Figure 70: Car ownership, by target groups, June 2009
- Dealer dodgers are the key target market – despite their cynicism
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- Figure 71: Car financing methods, by target groups, June 2009
Appendix – The Consumer – Car Ownership and Financing
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- Figure 72: Most popular car ownership, by demographics, June 2009
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- Figure 73: Next most popular car ownership, by demographics, June 2009 (continued)
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- Figure 74: Car financing methods, by demographics, June 2009
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Appendix – The Consumer – Attitudes towards Car Finance
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- Figure 75: Most popular consumer attitudes towards car finance, by demographics, June 2009
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- Figure 76: Next most popular consumer attitudes towards car finance, by demographics, June 2009 (continued)
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Appendix – The Consumer – Targeting Opportunities
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- Figure 77: Target groups, by demographics, June 2009
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