Table of Contents
Overview
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- What you need to know
- Scope of this Report
Executive Summary
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- Revenues ahead as a result of a number of actions
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- Figure 1: The vehicle recovery market, by value, 2011-21
- Price competition dents average premiums
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- Figure 2: Average premium paid, 2011-16
- Growth in UK car parc acting as a major driver
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- Figure 3: Number of licensed cars (Great Britain), 1995-2015
- Three companies account for 89% of all membership
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- Figure 4: Company shares of the vehicle recovery market, by UK membership, 2016
- Free or reduced price insurance accounts for half of all sales
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- Figure 5: Key channels used for purchasing breakdown recovery insurance, 2012-16
- AA scores strongest in terms of trust and differentiation
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- Figure 6: Attitudes towards and usage of selected brands, July 2016
- Promotional activity falls back in 2015
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- Figure 7: Recorded above-the-line, online display and direct mail total advertising expenditure on vehicle recovery, 2012-15
- Other organisations increasingly challenge the dominance of the big three
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- Figure 8: Ownership of breakdown cover, by recovery organisation, 2011-16
- Sticking with an existing provider of recovery services is popular
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- Figure 9: How most recent recovery insurance was arranged, July 2016
- Indirect channels are more important for purchasing
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- Figure 10: Key means by which current breakdown cover for your main vehicle was acquired, July 2016
- Costs are important when it comes to owning recovery insurance
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- Figure 11: Attitudes towards vehicle recovery, July 2016
- Vehicle owners split on the use of telematics
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- Figure 12: Interest in telematic policies, July 2016
- What we think
Issues and Insights
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- Solutions required to overcome pressure to compete on price
- The facts
- The implications
- Broadening your customer base is essential
- The facts
- The implications
- Is telematics the future?
- The facts
- The implications
The Market – What You Need to Know
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- Revenue growth remains strong…
- ...although average premiums paid have changed little
- The UK’s growing car parc is a significant driver
- Regular memberships dominate although are failing to make further progress
- Personal mobility appears to be falling
- Free or bundled sales dominate the market
Market Size and Forecast
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- Recovery services market records steady growth
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- Figure 13: UK vehicle recovery market, by value, at current and constant prices, 2011-21
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- Figure 14: Best- and worst-case forecasts of vehicle recovery market, by value, 2011-21
- Forecast methodology
- The impact of the EU referendum vote
- Clothing spend has been resilient in previous slowdowns
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- Figure 15: Alternative market scenarios for the post-Brexit women’s outerwear market, at current prices, 2016-21
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- Figure 16: Detailed Post-Brexit scenarios for the vehicle recovery market, at current prices, 2016-21
- Factors other than Brexit will impact on demand for vehicle recovery services
Market Segmentation
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- Regular membership up but failing to push on
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- Figure 17: Segmentation of the vehicle recovery market, by value, at current prices, 2011-16
- Prices paid show evidence of stagnation
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- Figure 18: Average premium paid, 2011-16
- Role of free and bundled sales
Market Drivers
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- Demand for new and used cars records strong growth…
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- Figure 19: New and used car market volumes, 2010-16
- …resulting in further growth in the size of the UK car parc
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- Figure 20: Number of licensed cars (Great Britain), 1995-2015
- Expansion in car sales has little impact on multi-car ownership
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- Figure 21: Percentage of households with car availability, in England, 2004-14
- Personal mobility is in decline
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- Figure 22: Trips, distance travelled and time taken (England), 2005-14
- Falling motoring expenses benefit those with a vehicle
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- Figure 23: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2011-15
- Fuel prices are down overall although with evidence of an upward move
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- Figure 24: Typical retail prices of petroleum products in the UK, July 2013-June 2016
- Second-hand cars benefit from falling prices
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- Figure 25: Price indices of new and used cars, 2002-14
- UK population both growing and ageing
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- Figure 26: Trends in the age structure of the UK population, 2011-21
- What next after Brexit?
Channels to Market
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- Half of those with vehicle recovery insurance got it free or at a reduced price
- Other channels are of variable importance
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- Figure 27: Key channels used for purchasing breakdown recovery insurance, 2012-16
Companies and Brands – What You Need to Know
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- Membership exceeds 29 million
- AA, RAC and Green Flag dominate the membership market
- AA is the strongest-performing brand
- Price is a key competitive factor with service bundling used to help minimise its impact
- Technology comes to the rescue
- Advertising spend goes into reverse
Competitive Strategies
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- Differentiation through service offered
- Price as a competitive factor
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- Figure 28: Prices of breakdown recovery products for the AA, RAC, Green Flag and LV=, 2012-16
- Upfront payment versus claim back
- Use of offers to entice sales
- Partnerships
- Retailers
- Financial institutions
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- Figure 29: Packaged current accounts that offer breakdown cover, 2016
- Vehicle manufacturers
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- Figure 30: Car manufacturer-branded breakdown cover on new purchases, 2016
Market Share
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- UK market dominated by three large players
- Vehicle recovery membership surpasses 29 million
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- Figure 31: Company shares of the vehicle recovery market, by UK membership, 2010-16
Advertising and Marketing Activity
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- Advertising spend falls back after 2013 peak
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- Figure 32: Total above-the-line, online display and direct mail advertising expenditure on breakdown recovery, 2012-15
- Seasonal variation in sector advertising expenditure
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- Figure 33: Recorded above-the-line, online display and direct mail total advertising expenditure on breakdown recovery, by month, 2015
- UKI, RAC and the AA dominate sector advertising spend
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- Figure 34: Recorded above-the-line, online display and direct mail total advertising expenditure on breakdown recovery, by advertiser, 2012-15
- Direct mail leads as the most important channel
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- Figure 35: Recorded above-the-line, online display and direct mail total advertising expenditure on breakdown recovery, by media type, 2012-15
- A note on adspend
Brand Research
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- Brand map: AA scores well in both differentiation and trust
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- Figure 36: Attitudes towards and usage of selected brands, July 2016
- Key brand metrics: AA strength comes from past consumer experience
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- Figure 37: Key metrics for selected brands, July 2016
- Brand attitudes: AA and RAC well positioned on non-price factors
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- Figure 38: Attitudes, by brand, July 2016
- Brand personality: Each of the big three players has a distinct personality
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- Figure 39: Brand personality – Macro image, July 2016
- Brand personality: AA wins when it comes to brand micro factors
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- Figure 40: Brand personality – Micro image, July 2016
- Brand analysis
- The AA attracts men and those in wealthier socio-economic groups
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- Figure 41: User profile of AA, July 2016
- RAC has strengths with older adults and especially older women
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- Figure 42: User profile of RAC, July 2016
- Green Flag has strengths with wealthier socio-economic groups and families
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- Figure 43: User profile of Green Flag, July 2016
Launch Activity and Innovation
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- Gadget to remotely identify potential breakdowns before they happen
- AA launches insurance company
- Complimentary roadside assistance for VW campervans
- ‘UK’s most comprehensive European breakdown cover’
- New telematics driver app for business drivers
- Smart Driver Club’s telematics-based insurance product with breakdown recovery support
The Consumer – What You Need to Know
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- Big three companies dominate the market
- Existing companies are well placed to continue to dominate the market
- Buying recovery insurance as part of vehicle insurance accounts for around a quarter of purchases
- Money-saving actions are of most interest to policyholders
- Broad split of interest in telematics policies
Presence of Recovery Organisations
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- AA dominates the market
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- Figure 44: Ownership of breakdown cover, by recovery organisation, June 2016
- AA and RAC attract different groups of customers
- Wealthy car owners are more likely to look beyond big three
- Other organisations appear to be growing their share of memberships
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- Figure 45: Ownership of breakdown cover, by recovery organisation, 2011-16
- Middle-aged adults, less wealthy and Scots least likely to have cover
- Individual companies have specific strengths within the market
Renewal Strategies
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- Significant minority renew with their existing company
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- Figure 46: How most recent recovery insurance was arranged, June 2016
- Older adults appear reluctant to change
- ABC1s are open to new ideas
- Online purchasers are more likely to shop around or move company
Where Cover is Acquired
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- Around a quarter of policies are purchased alongside vehicle insurance
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- Figure 47: Key means by which current breakdown cover for your main vehicle was acquired, June 2016
- Young and old adults acquire insurance in different ways
- Socio-economic background also influences purchase practice
- Dealers and internet comparison sites are growing in importance
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- Figure 48: Key means by which your current breakdown cover for your main vehicle was acquired, 2011-16
- New vehicle owners are likely to have insurance from a dealer/garage
- Green Flag sees the use of different channels compared to AA and RAC
Attitudes towards Vehicle Recovery Insurance
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- Ways of keeping down costs are of most interest to policyholders
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- Figure 49: Attitudes towards vehicle recovery, June 2016
- Young adults interested in short-term policies
- Urban drivers want other services and lower premiums for newer vehicles
- Discounts and technology separate different socio-economic groups
- Drivers of vehicles other than cars want other services
- Those acquiring policies from garages or dealers want lower premiums
- Attitudes towards vehicle recovery insurance – CHAID analysis
- Methodology
- Older buyers who buy direct are a target group for discounts
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- Figure 50: Vehicle recovery – CHAID – Tree output, July 2016
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- Figure 51: Vehicle recovery – CHAID – Table output, July 2016
Interest in Telematic Vehicle Recovery Policies
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- Broad split in terms of interest in telematics
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- Figure 52: Interest in telematic policies, June 2016
- Young, male and urban drivers show strongest interest in telematics…
- …while those in lower socio-economic groups are the least positive
- Women appear to have greatest uncertainty
- Owners of vehicles other than cars record high level of interest
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Data Sources
- Market sizing and segment performance
- Forecast methodology
- Forecast data
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- Figure 53: Forecast of UK vehicle recovery market (value) – Best- and worst-case scenarios, 2016-21
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