Table of Contents
Introduction
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- Report scope and definitions
- Abbreviations
Executive Summary
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- The market
- Sales volumes are growing steadily, and this trend should continue
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- Figure 1: Forecast of the car finance market, by volume sales – fan chart, 2006-16
- Used car sector continues to perform well
- Performance of related products
- Key factors
- The retail car industry
- Banks have become more risk-averse
- Regulatory developments
- Companies, brands and innovation
- Ford Credit, VWFS and GMAC are the market leaders
- Recent innovation
- Limited above-the-line advertising
- Distribution mix
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- Figure 2: Where purchased main car from, 2011
- The consumer
- Trends in car ownership, annual mileage and vehicle replacement
- 68% of UK adults have their own car
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- Figure 3: Proportion of adults who drive and own a car, October 2011
- 9% bought their last car with dealer/manufacturer finance
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- Figure 4: Method of financing most recent car purchase, October 2011
- 14% of adults plan to buy a car within the coming year
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- Figure 5: Intention to buy a car within the next year, October 2011
- Attitudes towards car finance
- What we think
Issues in the Market
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- How has the car finance market performed recently?
- And how is the wider motor retailing industry faring?
- What is the outlook for the new car market in 2012?
- How often are people replacing their cars?
- Will changes in the automotive distribution chain hit demand for car finance?
- Are car supermarkets making much of an inroad into the used car market?
- How has the industry reacted to the idea of further changes to consumer credit regulation?
Future Opportunities
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- Offer exciting discounts and promotions to appeal to bargain-hunters
- Improve penetration of the used car market to take advantage of the downsizing trend
Internal Market Environment
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- Key points
- Size of car parc stabilises
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- Figure 6: Number of cars in use in the UK, 2002-12
- Ageing car stock
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- Figure 7: Age distribution of cars in use, 2010
- New car sales plateau at two million…
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- Figure 8: New car registrations, by type, 2003-12
- … while used car sales similarly stabilise, at 6.8 million
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- Figure 9: Volume of new and used car sales, 2003-11
- UK car sales totalled £65 million in 2011, broadly in line with 2010
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- Figure 10: Value of new and used car sales, at current prices, 2003-11
- Margins on loan rates have increased noticeably since 2008
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- Figure 11: Average advertised unsecured loan rates, finance house base rate and three-month LIBOR, October 2007-October 2011
- Proposed changes to consumer credit legislation
Broader Market Environment
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- Key points
- Summary of the main macroeconomic indicators impacting on the consumer credit market
- Low consumer confidence depresses demand for big-ticket purchases
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- Figure 12: GfK Consumer Confidence Barometer – UK, January 2004-December 2011
- Household unsecured debt fell by 11% over the 2008-11 period
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- Figure 13: The value of personal sector debt (mortgages and consumer credit) and as a proportion of total PDI, at current prices, 2000-11
- Net lending increases, but from a very small base
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- Figure 14: Net consumer credit lending, 2007-11
Competitive Context
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- Key points
- Around three in five new private-car sales funded by point-of-sale dealer finance in 2011
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- Figure 15: Proportion of new private car sales bought with a car finance agreement, 2008-11
- Car finance accounts for a much smaller share of used car sales
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- Figure 16: Proportion of used car sales bought with a car finance agreement, 2008-11
- Rival products and alternative funding solutions
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- Figure 17: Method of financing most recent car purchase, October 2011
- New gross consumer credit lending increases slightly in 2011
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- Figure 18: Gross consumer credit lending, by type, 2007-11
- The most common reason people take out a personal loan is to buy a car
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- Figure 19: Reason for taking out personal loan, 2009-11
Strengths and Weaknesses in the Market
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- Figure 20: Point-of-sale car finance – market strengths, weaknesses, opportunities and threats, 2012
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Who’s Innovating?
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- Key points
- Limited scope for real product innovation
- Vauxhall introduces tailor-made finance package
- FinanceAcar launches world’s first car finance comparison site
- Moneybarn unveils the UK’s first online car finance calculator for the non-prime market
Market Size and Forecast
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- Key points
- Over one million car finance plans are sold by dealers each year
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- Figure 21: Volume and value of point-of-sale car finance plans sold (private sector only), 2003-11
- Used car sector continues to grow, while sales of new car plans experienced a modest fall in 2011
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- Figure 22: Volume and value of private car finance plans sold, segmented by new and used cars, 2008-11
- Mintel predicts steady market growth over the next five years
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- Figure 23: Volume of point-of-sale (private) car finance plans – fan chart, 2006-16
- Figure 24: Value of point-of-sale (private) car finance plans, at current prices – fan chart, 2006-16
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- Figure 25: Forecast of the point-of-sale (private) car finance market, by volume and value, 2006-16
- Forecast methodology
- Fan chart explanation
Market Share
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- Key points
- Most car manufacturers have set up subsidiaries to provide financing
- Specialist providers
- Manufacturer subsidiaries
- Ford has the largest share of the new car market, followed by Vauxhall
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- Figure 26: Share of new car registrations, by manufacturer, 2009-10
Companies and Products
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- Ford Credit
- GMAC Financial Services
- Volkswagen Financial Services
- Black Horse
- Santander Consumer Finance
Brand Communication and Promotion
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- Key points
- Loan adspend increases in 2011, but is still way down on pre-crisis levels
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- Figure 27: Advertising expenditure on car finance and loan products, 2007-11
- Nissan is the top car finance advertiser in 2011
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- Figure 28: Top five advertisers in the car finance market, 2011
- Most advertising is channelled through the press
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- Figure 29: Advertising expenditure on car finance, by media type, 2011
Channels to Market
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- Key points
- Most car finance is sold at the point of sale
- The franchised dealership is the main distribution outlet for new car finance
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- Figure 30: Ten largest franchised dealer networks in the UK, by brand and number of outlets, 2006-10
- Growth of the online sales channel
- Car supermarkets strengthen their presence in the used car market
- New and used car markets have a different distribution mix
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- Figure 31: Where purchased main car from, 2011
Annual Mileage, Owning and Replacing Cars
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- Key points
- Steady fall in multiple car ownership…
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- Figure 32: Number of cars owned by household, 2007-11
- … and in the number of full licence holders
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- Figure 33: Ownership of driving licence, 2007-11
- Most people drive 12,500 miles or less a year
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- Figure 34: Miles driven per year, 2011
- More than half of all car owners spent £6,000+ on their main car
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- Figure 35: Cost of car (main car only), 2011
- A five-door hatchback is the most popular style of car
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- Figure 36: Type of car owned (main car only), 2011
- Nearly one in three drivers obtained their main car five or more years ago
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- Figure 37: When obtained (main car only), 2011
- One in 20 car owners will replace their main car every two years or less
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- Figure 38: Frequency of replacing car (main car only), 2011
Car Ownership
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- Key points
- About Mintel’s consumer survey
- Just over two thirds of UK adults have a car
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- Figure 39: Proportion of adults who drive and have their own cars, October 2011
- Nearly half of new car owners bought their car less than two years ago
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- Figure 40: Segmentation of car owners, by type of car owned and when bought, October 2011
- A person’s socio-economic status strongly affects their propensity to own a car
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- Figure 41: Car ownership, by gender and socio-economic group, October 2011
- Those aged 55-74 are most likely to have a new car
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- Figure 42: Car ownership, by age of owner, October 2011
Method of Financing Last Car Purchase
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- Key points
- One in 11 car owners used point-of-sale finance to buy their last car
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- Figure 43: Method of financing most recent car purchase, by type of car owned and gender, October 2011
- The typical car finance customer is aged 35-54…
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- Figure 44: Method of financing most recent car purchase, by age group, October 2011
- … and works full-time, with a household income of £15.5-25K
- One in five HP customers part-exchanged their vehicle
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- Figure 45: Method of financing most recent car purchase, by those who used their savings, loan and HP agreement, October 2011
Car-buying Intentions
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- Key points
- 7 million UK adults are intending to buy a car within the coming year
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- Figure 46: Intention to buy a car within the next year – all adults, October 2011
- Most car sales will be made by existing car owners
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- Figure 47: Intention to buy a car within the next year – all adults, October 2011
- Used car owners are slightly more likely than new car owners to be planning a purchase
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- Figure 48: Intention to buy a car within the next year – existing car owners only, October 2011
- ABs are a major target group for the new car market
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- Figure 49: Intention to buy a car within the next year, by gender and socio-economic group, October 2011
- Those aged 35-54 are the main target audience for used cars
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- Figure 50: Intention to buy a car within the next year, by age, October 2011
- Around one in eight people who are planning to buy a car used dealer finance to fund their last purchase
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- Figure 51: Method of financing most recent car purchase, by car owners and prospective car buyers, October 2011
Attitudes Towards Car Finance
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- Key points
- Most people like to own their car outright
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- Figure 52: Attitudes towards car finance, by car owners and those intending to buy a car within the next year, October 2011
- Just 3% of car owners think that dealer finance is a dearer option than taking out a loan
- Men are much more likely than women to consider a lease purchase deal
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- Figure 53: Attitudes towards car finance, by gender, October 2011
- One in seven car owners aged 35-44 could not afford to buy a car without finance
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- Figure 54: Attitudes towards car finance, by age, October 2011
Appendix – Car Ownership
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- Figure 55: Car ownership, by demographics, October 2011
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Appendix – Profile of Drivers and Car Owners
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- Figure 56: Demographic profile of car owners and drivers, October 2011
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Appendix – Method of Financing Last Car Purchase
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- Figure 57: Method of financing most recent car purchase, by demographic, October 2011
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Appendix – Car Buying Intentions
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- Figure 58: Intention to buy new car within the next year, by demographics, October 2011
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Appendix – Profile of Car Finance Customers
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- Figure 59: Demographic profile of car finance customers, October 2011
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