Table of Contents
Executive Summary
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- The market
- Revenues approach £1.8 billion in 2018
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- Figure 1: Best- and worst-case forecasts of vehicle recovery market, by value, 2014-24
- Average premiums approach £58
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- Figure 2: Average premium paid, 2014-19
- Free and bundled recovery policies are increasingly popular
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- Figure 3: Key channels used for purchasing breakdown recovery insurance, 2013, 2015, 2017 & 2019
- New car sales are in decline
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- Figure 4: UK new registrations of cars, 2014-19
- Companies and brands
- AA performs strongly on differentiation and trust
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- Figure 5: Attitudes towards and usage of selected brands, July 2019
- AA is the dominant player in the market
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- Figure 6: Company shares of the vehicle recovery market, by membership, 2019 (est)
- Technology is a focus for innovation
- Investment reaches a high of £24 million in 2018
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- Figure 7: Total above-the-line, online display and direct mail advertising expenditure on breakdown recovery, 2014-18
- The consumer
- The AA is the most popular company for consumers
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- Figure 8: Ownership of breakdown cover, by recovery organisation, June 2019
- Price dominates when choosing a vehicle recovery company
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- Figure 9: Factors considered when selecting a provider of breakdown cover, June 2019
- 3 in 10 policy holders acquired recovery insurance with vehicle insurance
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- Figure 10: Key means by which current breakdown cover for your main vehicle was acquired, June 2019
- Company websites are popular for those buying online
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- Figure 11: Use of online channels, June 2019
- Email is preferred for communication with vehicle recovery companies
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- Figure 12: Preferences towards the use of communication methods, June 2019
- Telematics received mixed support
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- Figure 13: Interest in telematic vehicle recovery policies, June 2019
- Just over half are interested in ‘Uber Style’ recovery
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- Figure 14: Interest in an ‘Uber style’ recovery service, June 2019
- What we think
Issues and Insights
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- Profile of free and bundled policies continues to grow
- The facts
- The implications
- Non-price factors are assuming heightened importance
- The facts
- The implications
- Could an ‘Uber Style’ recovery policy really disrupt the market?
- The facts
- The implications
The Market – What You Need to Know
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- Steady growth forecast for the market
- Premium prices are under pressure again
- Free and bundled recovery policies are increasingly popular
- New car sales are in decline
Market Size and Forecast
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- Revenue growth slows after recent buoyancy
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- Figure 15: Best- and worst-case forecasts of vehicle recovery market, by value, 2014-24
- Recovery membership surpasses 31 million
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- Figure 16: UK vehicle recovery market, membership, 2014-19
- Revenues expected to surpass £2.0 billion by 2024
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- Figure 17: UK vehicle recovery market, by value, at current and constant prices, 2014-24
- Forecast methodology
Market Segmentation
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- Regular membership policies dominate
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- Figure 18: Segmentation of the vehicle recovery market, by value, at current prices, 2014-19
- Average premiums stagnate after recent growth
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- Figure 19: Average premium paid, 2014-19
- Traditional comprehensive recovery policies dominate
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- Figure 20: Segmentation of the vehicle recovery market (value), by policy type, 2018
- Polices sold via third parties are in the ascendance
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- Figure 21: Segmentation of the vehicle recovery market (value), by direct/indirect channels, 2018
Channels to Market
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- Growing trend to acquire insurance free or bundled
- Other channels see their importance stagnate
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- Figure 22: Key channels used for purchasing breakdown recovery insurance, 2013, 2015, 2017 and 2019
Market Drivers
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- New and used car purchasing softens
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- Figure 23: New and used car market volumes, 2014-19
- New car market in serious difficulty
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- Figure 24: UK new registrations of cars, 2014-19
- There’s more to life than the ‘B’ word
- Over half of adults plan to buy a car in the next 3 years
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- Figure 25: Intention to purchase a car in the next three years, November 2018
- Trend towards owning older cars increasing
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- Figure 26: Age structure of the UK car parc in years, 2014-18
- Car ownership varies across the country
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- Figure 27: Household car ownership by region (England), 2006/07 and 2016/17
- Increase in second car ownership offers opportunities for the market
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- Figure 28: Percentage of households with car availability, England, 2007-17
- Stabilisation in IPT at 12% is helpful for policies
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- Figure 29: Insurance premium tax rates, 1997-2017
- Owning a car is increasingly becoming expensive
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- Figure 30: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2014-18
- London leads with growing restrictions on using vehicles in cities
- Growth in the UK’s population should prove helpful for the market
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- Figure 31: Trends in the age structure of the UK population, 2013-23
Companies and Brands – What You Need to Know
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- RAC sees a resurgence in its profile
- Financial promotions are important for the largest service providers
- Technology remains a major focus for innovation
- Television dominates advertising expenditure
- AA delivers the strongest attitudes although is similar to rival RAC in
Market Share
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- UK market continues to fragment
- RAC performing strongest within the big three
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- Figure 32: Company shares of the vehicle recovery market, by membership, 2013-19
- Not all smaller players are seeing growth
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- Figure 33: Share of others in the market, by UK membership, 2015, 2017 and 2019
- AA is the clear leader by revenue
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- Figure 34: Company shares of the vehicle recovery market, by value, 2018
Competitive Strategies
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- Service options are a key competitive differentiator
- Matrix pricing used by some to offer a bespoke package
- Geographic and call out limitations also offer discounts
- Monthly payment options join annual, reclaim and PAYU
- Financial promotions popular with largest players
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- Figure 35: Key short term offers from vehicle recovery companies, July 2019
- Use of partnerships to extend market coverage
- Retailers
- Financial institutions
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- Figure 36: Packaged current accounts that offer breakdown cover, July 2019
- Vehicle manufacturers
Launch Activity and Innovation
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- AA’s Smart Breakdown offers second generation support for drivers
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- Figure 37: Smart Breakdown and the AA app
- RAC launches new lightweight EV charger
- Video analysis offered for problem solving
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- Figure 38: RAC remote technician service
Advertising and Marketing Activity
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- Investment reaches a high of £24 million in 2018
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- Figure 39: Total above-the-line, online display and direct mail advertising expenditure on breakdown recovery, 2014-18
- Advertisers shift investment to earlier in the year
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- Figure 40: Recorded above-the-line, online display and direct mail total advertising expenditure on breakdown recovery, by month, 2017 and 2018
- AA dominates the market
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- Figure 41: Recorded above-the-line, online display and direct mail total advertising expenditure on breakdown recovery, by advertiser, 2014-18
- Television is increasingly the preferred media for advertisers
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- Figure 42: Recorded above-the-line, online display and direct mail total advertising expenditure on breakdown recovery, by media type, 2014-18
- Nielsen Ad Intel coverage
Brand Research
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- AA leads on trust and differentiation from other major rivals
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- Figure 43: Differentiation and trust towards selected brands, July 2019
- Key brand metrics
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- Figure 44: Key metrics for selected brands, July 2019
- Brand attitudes: key brands reflect specific attitudes
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- Figure 45: Attitudes, by brand, July 2019
- Brand personality: AA and RAC have similar macro brand personalities
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- Figure 46: Brand personality – macro image, July 2019
- Micro personalities reinforce view that AA and RAC have similar market positioning
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- Figure 47: Brand personality – micro image, July 2019
The Consumer – What You Need to Know
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- Market is consolidating once again
- Price dominates although some buyers look at different factors
- A growing number of policies are being acquired with a vehicle
- Company websites are the preferred online route
- Digital methods of communication are broadening
- Mixed interest towards telematics
- Good opportunities exist for an ‘Uber Style’ recovery service
Presence of Breakdown Recovery Organisations
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- AA is the clear market leader
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- Figure 48: Ownership of breakdown cover, by recovery organisation, June 2019
- Older adults less bothered about going with a well-known provider
- Presence of recovery companies is also skewed geographically
- Certain providers have strong appeal with higher socio-economic groups
- AA has strong links with new car buyers
- RAC and Green Flag register recent improvement as position of others falters
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- Figure 49: Ownership of breakdown cover, by recovery organisation, 2014-19
Selecting a Recovery Provider
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- Price dominates when selecting a provider
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- Figure 50: Factors considered when selecting a provider of breakdown cover, June 2019
- Price and technology split the sexes
- Old and young adults want different things …
- … as do those living in towns and villages
- New and used car owners want different things
- AA members are strongly focused on brand attributes
- Non-price factors appear to be assuming increased importance
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- Figure 51: Factors considered when selecting a provider of breakdown cover, 2017 and 2019
How Cover is Acquired
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- Acquiring as part of vehicle insurance leads
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- Figure 52: Key means by which current breakdown cover for your main vehicle was acquired, June 2019
- Buying alongside vehicle insurance is important for young adults
- Online is popular for rural policy holders
- Traditional sales channels popular with those on lower incomes
- Dealers are important channels for new car buyers
- Certain channels are more important for members of some organisations
- Links with insurance providers and dealers both strengthen
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- Figure 53: Key means by which current breakdown cover for your main vehicle was acquired, 2017 and 2019
Preferences towards Online Channels
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- Company websites are the most preferred route online
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- Figure 54: Use of online channels, June 2019
- Direct contact with company appeals more to men
- Affluent adults are also likely to purchase direct
- Websites dominate for those going online
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- Figure 55: Ways by which breakdown cover was purchased online, June 2019
- Development of apps should be of interest to women
Preferences towards Communication Methods
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- Digital communication methods dominate with email the most preferred
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- Figure 56: Preferences towards the use of communication methods, June 2019
- Young adults are most amenable to newer electronic methods …
- … as are those living in cities
- Presence of children impacts on use newer electronic methods
- RAC members appear least interested in new methods of communication
Interest in Telematic Vehicle Recovery Policies
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- Vehicle owners split when it comes to interest in telematics
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- Figure 57: Interest in telematic vehicle recovery policies, June 2019
- Young and old represent different markets
- City dwellers also record high interest
- Older women are more likely to be unsure
- New car owners have much stronger interest in telematic technology
- Little change in interest
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- Figure 58: Interest in telematic vehicle recovery policies, June 2016 and 2019
Interest in an ‘Uber Style’ Recovery Service
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- Nearly a quarter of vehicle owners are very interested
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- Figure 59: Interest in an ‘Uber style’ recovery service, June 2019
- Young men show strong interest
- Urban areas appear well suited
- Pricing might not be an issue
- New car owners…
- … and members of the certain companies show strong interest in this idea
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Market sizing and segment performance
- Forecast methodology
- Forecast Data
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- Figure 60: Forecast of UK vehicle recovery market (value) – best- and worst-case scenarios, 2019-24
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