Table of Contents
Overview
-
- What you need to know
- Products covered in this report
Executive Summary
-
- The market
- Strong double-digit growth begins to slow
-
- Figure 1: Value of car finance contracts sold through dealerships (private sector only) – Fan chart, 2011-21
- Franchised dealers continue to dominate distribution
-
- Figure 2: Where people buy cars, February 2017
- Companies and brands
- Car dealerships control two thirds of finance distribution
-
- Figure 3: Car finance providers used, February 2017
- Providers target innovation and greater share of the used car segment
- The consumer
- Savings used more commonly than car finance for last car purchase
-
- Figure 4: How people paid for the last car they bought or leased, February 2017
- Hire purchase has proved narrowly more popular than PCP
-
- Figure 5: Car finance types used, February 2017
- Three quarters say they researched car finance before buying
- Low cost and brand reputation sway purchasing decisions
-
- Figure 6: Approaches to car finance arrangement, February 2017
- The majority intend to own the car they are financing at the end of the product
-
- Figure 7: Attitudes towards car finance, February 2017
- What we think
Issues and Insights
-
- Online distribution can threaten dealerships through user experience
- The facts
- The implications
- The temptation of that new car smell
- The facts
- The implications
The Market – What You Need to Know
-
- Strong double-digit growth begins to slow…
- … but not before catching the attention of the FCA
- New and used car finance both grew by 12% in value in 2016
- Franchised dealers continue to dominate distribution
Market Size and Forecast
-
- Strong double-digit growth begins to slow
-
- Figure 8: Volume and value of car finance contracts sold through dealerships (private sector only), 2010-15
- Value and volume growth are expected to weaken further
-
- Figure 9: Value of car finance contracts sold through dealerships (private sector only) – Fan chart, 2011-21
- Figure 10: Value of car finance contracts sold through dealerships (private sector only), 2011-21
- Figure 11: Volume of car finance contracts sold through dealerships (private sector only) – Fan chart, 2011-21
-
- Figure 12: Volume of car finance contracts sold through dealerships (private sector only), 2011-21
- Forecast methodology
Market Segmentation
-
- New and used car finance showed double-digit value growth in 2016
-
- Figure 13: Volume and value of private car finance contracts sold via dealerships, segmented by new and used cars, 2010-16
- More than four in every five new cars is bought on finance
-
- Figure 14: Proportion of new private car sales bought with a car finance agreement, 2010-16
- Figure 15: Proportion of used car sales bought with a car finance agreement, 2010-15
- Half of car buyers intend to get a new car
-
- Figure 16: Car purchasing intentions: used or new, February 2017
Market Drivers
-
- FCA announces investigation into the car finance market…
- … and product concerns are key
- New and used car sales have continued to grow
-
- Figure 17: New and used car market volumes, 2011-16
-
- Figure 18: UK new and used car sales, by volume, 2011-21
- Short-term car buying demand is relatively constant …
-
- Figure 19: Buying/replacing cars, last three months and next three months, June 2012-April2017
- … and more than half of people intend to buy a car in the next three years
-
- Figure 20: Car purchasing plans, February 2017
- Low interest rates have helped make car finance affordable
Channels to Market
-
- Franchised dealers continue to lead the way
-
- Figure 21: Sales of new and used car volumes, by channel, 2013-16
Companies and Brands – What You Need to Know
-
- Car dealerships control two thirds of finance distribution
- Providers target innovation and greater share of the used car segment
- PCP is propping up car finance adspend
Market Share
-
- Car dealerships control two thirds of finance distribution
-
- Figure 22: Car finance providers used, February 2017
- Car dealerships: Ford dominates car registrations
-
- Figure 23: Manufacturer shares of new car registrations, 2016
- Banks and building societies: Lloyds Banking Group is well-placed for car finance and car loans
Competitive Strategies
-
- Providers look to innovation for growth
- BMW Financial Services to back start-ups
- Zopa offers loans targeting PCP balloon payments
- Ford broadens financial services offering
- Providers invest in used car finance
- Carbaya
- Raphael Finance
Advertising and Marketing Activity
-
- PCP is propping up car finance adspend
-
- Figure 24: Total above-the line, online display and direct mail advertising expenditure on credit products that can be used for car purchases, by type, 2014/15- 2016/17*
- Carfinance247 invests over £2 million in advertising
-
- Figure 25: Carfinance247, London bus advert, May 2017
- Figure 26: Total above-the line, online display and direct mail advertising expenditure on car finance products, by top five advertisers, 2016/17*
- Car finance adspend is skewed towards digital channels
-
- Figure 27: Total above-the line, online display and direct mail advertising expenditure on credit products that can be used for car purchases, by advertiser, 2016/17*
- Banks look to cross-sell from other financial products
-
- Figure 28: Advertising on log-in page of mobile banking app, April 2017
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
-
- Savings more commonly than car finance for last car purchase
- Two thirds took car credit from their car dealership
- Three quarters say they researched car finance before buying
- Low cost and brand reputation sway purchasing decisions
- The majority intend to own the car they are financing at the end of the product
Car Ownership
-
- Seven in ten people own a car
-
- Figure 29: Car ownership, February 2016-17
- People are most likely to have cars bought two years ago or more
-
- Figure 30: Car acquisition, February 2017
- More than a third of non-car owners have a license
-
- Figure 31: Car access among non-car owners, February 2017
How People Paid for Last Car Purchase
-
- Savings were used more commonly than car finance for last car purchase
- Secondary sources help boost affordability
-
- Figure 32: How people paid for the last car they bought or leased, by number of sources used, February 2017
-
- Figure 33: Number of sources used for last car bought or leased, February 2017
- Hire purchase has proved narrowly more popular than PCP
-
- Figure 34: Car finance types used, February 2017
Car Finance Providers and Channels Used
-
- Two thirds took car credit from their car dealership
-
- Figure 35: Car finance providers used, February 2017
- Car dealerships have strongest hold with 45+ age group
-
- Figure 36: Car finance providers used, by age, February 2017
- One in five arranged their car finance online
-
- Figure 37: Car finance arrangement methods, February 2017
-
- Figure 38: Car finance arrangement methods, by age, February 2017
Car Finance Information Sources
-
- Three quarters say they researched car finance before buying
-
- Figure 39: Car finance information sources, February 2017
-
- Figure 40: Car finance information sources, by age, February 2017
How People Intend to Pay for Future Car Purchase
-
- A third of people plan to use car finance to buy a car
-
- Figure 41: Car funding plans, February 2017
- Older Millennials show strong potential for future car finance uptake
-
- Figure 42: Car funding plans, February 2017
- Existing car owners more likely to take their next car purchase online
-
- Figure 43: Likelihood to purchase next car online, by car ownership, February 2017
Approaches to Car Finance Arrangement
-
- Low cost and brand reputation sway purchasing decisions
- Scope to improve awareness of refinance options
-
- Figure 44: Approaches to car finance arrangement, February 2017
- 18-44s are more likely to explore their options, but half are trapped by their car choice
-
- Figure 45: Approaches to car finance arrangement, by age, February 2017
Attitudes towards Car Finance
-
- Most intend to own the car they are financing at the end of the product
- Opportunities to improve consumer understanding and customer service
-
- Figure 46: Attitudes towards car finance, February 2017
- Millennials are more tempted by the promise of new and expensive cars on credit
-
- Figure 47: Attitudes towards car finance, by age, February 2017
Appendix – Data Sources, Abbreviations and Supporting Information
-
- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
-
-
- Figure 48: Forecast of private car finance plans (value) – Best and worst case scenarios, 2016-21
- Figure 49: Forecast of private car finance plans (volume) – Best and worst case scenarios, 2016-21
- Forecast Methodology
-
Back to top