Table of Contents
Overview
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- What you need to know
- Products covered in this Report
Executive Summary
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- The market
- Revenues approach £1.7 billion as market continues to expand
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- Figure 1: Best- and worst-case forecasts of vehicle recovery market, by value, 2012-22
- Most policies provide comprehensive cover
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- Figure 2: Segmentation of the vehicle recovery market (value), by policy type, 2016
- Free or reduced-price insurance dominates the market
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- Figure 3: Key channels used for purchasing breakdown recovery insurance, 2011-17
- The UK’s car parc is slowly ageing
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- Figure 4: Age structure of the car parc in years, 2012 and 2016
- Companies and brands
- Big three account for 85% of policies
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- Figure 5: Company shares of the vehicle recovery market, by UK membership, 2017
- AA performs the strongest amongst consumers
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- Figure 6: Attitudes towards and usage of selected brands, July 2017
- Telematics comes of age
- Advertising investment in steady decline
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- Figure 7: Total above-the-line, online display and direct mail advertising expenditure on breakdown recovery, 2013-16
- The consumer
- Smaller companies are taking a growing share of the market
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- Figure 8: Ownership of breakdown cover, by recovery organisation, 2011-17
- Price dominates as the most important factor when selecting a company
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- Figure 9: Factors considered when selecting a provider of breakdown cover, July 2017
- Included with car insurance and buying online account for around a half of purchases
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- Figure 10: Key means by which current breakdown cover for your main vehicle was acquired, July 2017
- Roadside assistance is the most popular form of help sought
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- Figure 11: Use of vehicle recovery services by those who hold vehicle recovery, July 2017
- Alternatives to traditional insurance policies provoke interest
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- Figure 12: Interest in different payment methods for vehicle recovery insurance, July 2017
- What we think
Issues and Insights
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- Recent rise in IPT only serves to strengthen focus on price
- The facts
- The implications
- Buying direct online appears to be in decline
- The facts
- The implications
- Opportunities for new styles of policy
- The facts
- The implications
The Market – What You Need to Know
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- Vehicle recovery market continues to demonstrate growth
- Average premiums boosted by rises in IPT
- Indirect sales dominate the market
- Expansion in car parc is a major driver
Market Size and Forecast
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- Revenues show signs of strengthening
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- Figure 13: Best- and worst-case forecasts of vehicle recovery market, by value, 2012-22
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- Figure 14: UK vehicle recovery market, by value, at current and constant prices, 2012-22
- Forecast methodology
Market Segmentation
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- Regular membership market records strong growth
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- Figure 15: Segmentation of the vehicle recovery market, by value, at current prices, 2012-17
- Average premium prices showing evidence of recovery
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- Figure 16: Average premium paid, 2012-17
- Comprehensive policies facing competition from those with restrictions
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- Figure 17: Segmentation of the vehicle recovery market (value), by policy type, 2016
- Policies sold direct are the most valuable segment
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- Figure 18: Segmentation of the vehicle recovery market (value), by direct/indirect channels, 2016
Channels to Market
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- Free or reduced-price insurance dominates the market
- Online sales fall as other channels increase
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- Figure 19: Key channels used for purchasing breakdown recovery insurance, 2011-17
Market Drivers
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- The UK car parc is ageing…
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- Figure 20: Age structure of the car parc in years, 2012, 2014 and 2016
- … helped by a strong used market and recent growth in overall sales
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- Figure 21: New and used car market volumes, 2012-17
- Falling prices for second-hand cars increasingly make them affordable
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- Figure 22: Price indices of new and used cars, 2002-16
- Over half of adults plan to buy a car in the next three years
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- Figure 23: Intention to purchase a car in the next 3 years, February 2017
- Fuel prices have also recently begun to increase after falling back
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- Figure 24: Average annual retail prices of petroleum products and a crude oil price index, at current prices, January 2000-July 2017
- Rises in IPT impact directly on vehicle recovery insurance
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- Figure 25: Insurance premium tax rates, 1997-2017
- Cars dominate over other forms of transport …
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- Figure 26: Mode share (average distance travelled), England, 2015
- … although personal mobility appears to be in decline
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- Figure 27: Trips, distance travelled and time taken, 2005-15
- A growing an ageing population should present opportunities …
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- Figure 28: Trends in the age structure of the UK population, 2011-21
Companies and Brands – What You Need to Know
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- Dominant big 3 face growing competition
- Range of competitive strategies employed to attract customers
- Telematics leads what is a number of areas of development
- Investment in promoting services shows steady decline
Market Share
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- Three established players facing increased competition
- Vehicle recovery membership approaches 30 million
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- Figure 29: Company shares of the vehicle recovery market, by uk membership, 2011-17
- Call Assist is the largest of the others in the market
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- Figure 30: Share of others in the market, by UK membership, 2016
Competitive Strategies
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- Roadside assistance is a key competitive battleground
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- Figure 31: Review of roadside assistance prices and packages, July 2017
- Technology is emerging as a disruptor
- Upfront payment versus deferred payment
- Short-term offers are popular with the big 3
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- Figure 32: Key short term offers from vehicle recovery companies, July 2017
- Use of partnerships to extend market coverage
- Retailers
- Financial institutions
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- Figure 33: Packaged current accounts that offer breakdown cover, 2017
- Vehicle manufacturers
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- Figure 34: Selected car manufacturer-branded breakdown cover on new purchases, 2017
Launch Activity and Innovation
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- Car Genie promises advanced telematics
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- Figure 35: AA Car Genie
- … as does Green Flag with its Alert Me system
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- Figure 36: Green Flag Alert me
- Proof of breakdown…the roadside selfie service
- Car breakdown cover plan designed to protect the most vulnerable motorists
- Roadside breakdown service based on Uber model
Advertising and Marketing Activity
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- Advertising in steady decline
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- Figure 37: Total above-the-line, online display and direct mail advertising expenditure on breakdown recovery, 2013-16
- Summer is a popular time for expenditure
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- Figure 38: Recorded above-the-line, online display and direct mail total advertising expenditure on breakdown recovery, by month, 2016
- RAC and AA pull back their investment
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- Figure 39: Recorded above-the-line, online display and direct mail total advertising expenditure on breakdown recovery, by advertiser, 2013-16
- Television and direct mail dominate with digital showing strong growth
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- Figure 40: Recorded above-the-line, online display and direct mail total advertising expenditure on breakdown recovery, by media type, 2013-16
- Nielsen Ad Intel coverage
Brand Research
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- AA leads the market in terms of consumer attitudes
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- Figure 41: Attitudes towards and usage of selected brands, July 2017
- Key brand metrics
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- Figure 42: Key metrics for selected brands, July 2017
- Brand attitudes: major players are positioned in different areas of the market
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- Figure 43: Attitudes, by brand, July 2017
- Brand personality: the big 3 have some of the most appealing personality elements …
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- Figure 44: Brand personality – Macro image, July 2017
- … with the AA and RAC the strongest overall
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- Figure 45: Brand personality – Micro image, July 2017
The Consumer – What You Need to Know
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- AA has a commanding presence within the market
- Price is a clear favourite with buyers
- Majority of drivers have experience of roadside assistance
- Traditional insurance faces from a number of alternatives
Presence of Recovery Organisations
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- AA is the dominant name in the market
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- Figure 46: Ownership of breakdown cover, by recovery organisation, July 2017
- The AA proves popular with young and affluent adults
- Older adults and less affluent more likely to opt for smaller companies
- Partnerships with car manufacturers favour owners of new cars
- Smaller organisations represent a real challenge to the big 3
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- Figure 47: Ownership of breakdown cover, by recovery organisation, 2011-17
Selecting a Provider
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- Price dominates when selecting a company
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- Figure 48: Factors considered when selecting a provider of breakdown cover, July 2017
- Older adults want it all
- Features and innovations are popular with a number of specific groups
- Socio-economic status and income favour use of multiple factors when choosing insurance
- Price and non-price factors are of interest to specific groups
How Cover is Acquired
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- Vehicle insurance leads as a way of acquiring recovery insurance
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- Figure 49: Key means by which current breakdown cover for your main vehicle was acquired, July 2017
- Having recovery insurance included with vehicle insurance attracts a range of groups
- Online is not simply the preserve of young adults
- Partnering is an important way of achieving sales
- Online and telephone is a popular route for those focused on price
- Websites are more popular than apps for online buyers
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- Figure 50: Key means by which current breakdown cover for your main vehicle was acquired, July 2017
- Men and women exhibit different preferences towards websites
- Price comparison websites popular with certain groups
- Manufacturer websites popular with past use of a company
Frequency of Use
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- Roadside assistance is the most popular form of assistance
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- Figure 51: Use of vehicle recovery services by those who hold vehicle recovery, July 2017
- Young adults are a key market of all types of assistance
- Affluence is also factor in demand for services
- Experience of using recovery services is growing
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- Figure 52: Use of vehicle recovery services by those who hold vehicle recovery, 2015 and 2017
Future Policy Types
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- Traditional insurance policies are not popular with all
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- Figure 53: Interest in different payment methods for vehicle recovery insurance, July 2017
- Older adults remain core audience for traditional insurance policies
- Wealthy socio-economic groups are most likely to look for alternatives
- PAYU insurance is popular with wealthy adults …
- … while families with young children also want something different
- New car owners are a target market for reclaim and PAYU policies …
- ... which are also favoured by those interested in non-price benefits
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 54: Forecast of UK vehicle recovery market (value) – best- and worst-case scenarios, 2017-22
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