Table of Contents
Executive Summary
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- A market showing signs of growth
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- Figure 1: The vehicle recovery market, by value, 2010-20
- Regular membership dominates the market
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- Figure 2: Segmentation of the vehicle recovery market, by value, at current prices, 2010-15
- Price competition impacts on average amount paid for policies
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- Figure 3: Average premium paid, 2010-15
- Three companies dominate in terms of membership numbers
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- Figure 4: Company shares of the vehicle recovery market, by UK membership, 2015
- Free or insurance offered at a reduced price is a growing market
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- Figure 5: Key channels used for purchasing breakdown recovery insurance, 2011-15
- Promotional activity is focused on the summer months
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- Figure 6: Recorded above-the-line, online display and direct mail total advertising expenditure on vehicle recovery, by month, 2014
- Consumer preferences suggest smaller companies are gaining prominence
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- Figure 7: Ownership of breakdown cover, by recovery organisation, 2011-15
- Peace of mind is key reason for holding vehicle recovery insurance
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- Figure 8: Reason for holding vehicle recovery insurance, June 2015
- Ability to fix a vehicle dominates when choosing a supplier of recovery services
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- Figure 9: Most important factors when choosing a vehicle breakdown cover provider (most important factor), June 2015
- Purchase with vehicle insurance is most important way of buying vehicle recovery services
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- Figure 10: Key means by which your current breakdown cover for your main vehicle was acquired, June 2015
- Fix at roadside is service most likely to have been used by drivers
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- Figure 11: Use of vehicle recovery services by those who hold vehicle recovery insurance, June 2015
Issues and Insights
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- How can companies increase profitability in a price-driven market?
- What is the future of marketing?
- How does the market attract the 15% who currently don’t hold vehicle recovery insurance?
The Market – What You Need to Know
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- Revenues ahead 15% on 2010
- Strong growth for new car sales is a major driver
- Falling fuel prices are making filling up cheaper
- Regular membership is growing
- Price competition is a feature of the market
- Long-term concerns about the role of car and in personal transport
Market Size and Forecast
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- Figure 12: UK vehicle recovery market, by value, at current and constant prices, 2010-20
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- Figure 13: Best- and worst-case forecasts of vehicle recovery market, by value, 2010-20
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Segment Performance
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- Regular membership dominates
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- Figure 14: Segmentation of the vehicle recovery market, by value, at current prices, 2010-15
- Price competition dents average premiums…
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- Figure 15: Average premium paid, 2010-15
- …as does use of partners
Market Drivers
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- New sales increasing in both private and business and fleet sectors
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- Figure 16: UK new registrations of motor vehicles, 2010-15
- Distance travelled is in steady decline
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- Figure 17: Trips, distance travelled and time taken, 2004-14
- Stagnation in car ownership and multi-car households
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- Figure 18: Percentage of households with car availability, England, 1995-2014
- Cost of car ownership on the rise
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- Figure 19: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2010-14
- Falling fuel prices
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- Figure 20: Typical retail prices of petroleum products in the UK, May 2012-June 2015
- Second-hand cars record a fall in their price
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- Figure 21: Price indices of new and used cars, 2003-14
- Other factors influencing the market
Key Players – What You Need to Know
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- Market dominated by big three players…
- …in addition to a large number of smaller concerns
- Membership is showing signs of expanding
- Profitability within sector can be an issue
- Success in the entry-level market is sought after
- Indirect sale of policies is an important market on its own
Companies and Services
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- Vehicle Recovery Membership
- AA is clear leader in terms of members
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- Figure 22: Company shares of the vehicle recovery market, by UK membership, 2009-15
- Vehicle Recovery Revenues
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- Figure 23: Leading vehicle recovery companies, turnover, 2012-14
- Vehicle Recovery Operating Profit
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- Figure 24: Leading vehicle recovery companies, operating profits, 2012-14
- Operating in the market
- Price is an important differentiator
- RAC looks to reposition itself
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- Figure 25: Prices of breakdown recovery products for the AA, RAC, Green Flag and LV=, 2012-15
- Involvement of others
- Retailers
- Financial institutions
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- Figure 26: Packaged current accounts that offer breakdown cover, 2014
- Vehicle manufacturers
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- Figure 27: Car manufacturer-branded breakdown cover on new purchases, 2014
Channels to Market
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- Free or reduced price insurance attracts half of all customers…
- …and is growing in importance
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- Figure 28: Key channels used for purchasing breakdown recovery insurance, 2011-15
Brand Communication and Promotion
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- Fluctuating advertising spend
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- Figure 29: Recorded above-the-line, online display and direct mail total advertising expenditure on vehicle recovery, 2011-14
- Advertising peaks during the summer
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- Figure 30: Recorded above-the-line, online display and direct mail total advertising expenditure on vehicle recovery, by month, 2014
- Three companies dominate the market
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- Figure 31: Recorded above-the-line, online display and direct mail total advertising expenditure on vehicle recovery, by advertiser, 2011-14
- Growth in radio advertising
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- Figure 32: Recorded above-the-line, online display and direct mail total advertising expenditure on vehicle recovery, by media type, 2011-14
- Figure 33: Recorded above-the-line, online display and direct mail total advertising expenditure on vehicle recovery, by media type, 2011-14
- A note on adspend
Innovation and Launch Activity
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- Service enhancement
- Technology
- New markets
- Marketing
The Consumer – What You Need to Know
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- Breakdown cover is popular with most motorists
- Peace of mind is key reason for holding insurance
- Ability to fix a vehicle is more important than price as a factor when purchasing
- Around three in 10 purchase recovery insurance with their breakdown insurance
- Many policyholders have never called upon assistance
Presence of Recovery Organisations
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- Leading three companies account for over half of the market
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- Figure 34: Ownership of breakdown cover, by recovery organisation, June 2015
- Age and income appear to influence choice of company
- Big three dominate despite fall in their share of market
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- Figure 35: Ownership of breakdown cover, by recovery organisation, 2011-15
- Three quarters of used car owners don’t have cover on their main vehicle
Reasons for Holding Vehicle Recovery Insurance
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- Peace of mind dominates as key reason for holding cover
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- Figure 36: Reason for holding vehicle recovery insurance, June 2015
- Age, gender, location and wealth – four segments with noticeable differences
- New and old owners buy for different reasons
Factors Sought when Choosing Vehicle Recovery Insurance
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- Ability to fix at roadside dominates as most important factor
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- Figure 37: Most important factors when choosing a vehicle breakdown cover provider (most important factor), June 2015
- Older adults, urban drivers and those on low incomes demand the most
- Price dominates what are a small number of factors that are important to drivers
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- Figure 38: Most important factors when choosing a vehicle breakdown cover provider (any and top five factors), June 2015
Where Cover is Acquired
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- Vehicle insurance is a common time to purchase recovery insurance
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- Figure 39: Key means by which your current breakdown cover for your main vehicle was acquired, June 2015
- Young adults prefer indirect channels
- Growth in indirect purchasing
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- Figure 40: Key means by which your current breakdown cover for your main vehicle was acquired, 2011-15
- Direct sale is more important for those with a second-hand or nearly new car
Frequency of Vehicle Recovery Use
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- Around half of policyholders have never called on assistance
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- Figure 41: Use of vehicle recovery services by those who hold vehicle recovery, June 2015
- Roadside fixes are the most common reason for requesting assistance
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- Figure 42: Use of vehicle recovery services by those who hold vehicle recovery insurance (any use by service used), June 2015
- Men are more likely to have used recovery services
- Young adults have experience of using a broad range of services
- Experience in use of these services is highest amongst urban and wealthy car owners
- A quarter have required vehicle recovery services in the last 12 months
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- Figure 43: Use of vehicle recovery services by those who hold vehicle recovery insurance (any service by when used), June 2015
- Young adults likely to be regular users of services
- Urban areas provide regular demand
- Those with a used car are more likely to use vehicle recovery services
Appendix –Data Sources and Abbreviations
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- Data sources
- Market sizing and segment performance
- Fan Chart Forecast
- Abbreviations
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