Car Review - UK - February 2021

OVERVIEW
Key issues covered in this Report
COVID-19: Market context
Impact of the January lockdown and the vaccination rollout
Economic and other assumptions
Products covered in this Report
EXECUTIVE SUMMARY
Impact of COVID-19 on the automotive sector
Figure 1: Short, medium and long-term impact of COVID-19 on the car sector, February 2021
The market
Brexit and COVID-19 combine to wreak havoc on the market
Figure 2: UK new and used car sales, by volume, 2015-25
Slow recovery expected for the market
UK car parc continues to expand
Dual-purpose cars have been popular amongst buyers recently
Online set to benefit from COVID-19
Leisure is one of a number of important uses for a car
Companies and brands
Trading up unaffected by COVID-19 pandemic
Value brands also continue to see growth
COVID-19 sees realignment of channel spend
Many brands have unique positioning
The consumer
Easing of concerns associated with COVID-19 should assist car sales
Figure 3: Non-essential spending, April-December 2020
A quarter of adults aren’t car owners
Figure 4: Car ownership, November 2020
Dominance of used cars illustrates challenges for the new car sector
Figure 5: Age of car owned, November 2020
Age and income are key barriers to car ownership
Figure 6: Other access to cars, November 2020
Focus on small cars is likely to win business
Figure 7: Type of car owned, November 2020
Technology could act as a hook for older drivers
Figure 8: Interest in innovations, November 2020
Multiple channels should still be considered for promotion
Figure 9: Sources of information, November 2020
Only half of adults are interested in alternatives to car ownership
Figure 10: Alternatives to car ownership, November 2020
ISSUES AND INSIGHTS
COVID-19 set to both depress and alter demand for cars
Trade and Cooperation Agreement brings stability to UK car market
Interest in cars using alternative fuels set to dent SUV profile
THE MARKET – KEY TAKEAWAYS
Action needed to overcome recent falling sales
Sizeable UK car parc remains a challenge for sellers
Smaller cars have the opportunity to re-assert their profile
Online has the potential to benefit from impact of COVID-19
Wide-ranging demands of many car owners shouldn’t be overlooked
MARKET SIZE AND FORECAST
Automotive market badly affected by COVID-19 pandemic
Figure 11: Short, medium and long-term impact of COVID-19 on the car sector, February 2021
Used cars are growing their share of sales
Figure 12: New and used car sales, by volume, 2015 and 2020
AFVs are also up as demand for new diesel cars slumps
Figure 13: New car sales, by type, 2015 and 2020
Brexit and COVID-19 combine to create a difficult period for the market
Vaccinations and Brexit agreement offer growth opportunities …
…although new and used sales are unlikely to recover until 2023
Figure 14: UK new and used car sales, by volume, 2015-25 (prepared on 12 January 2021)
Figure 15: UK new and used car sales, by volume, 2015-25 (prepared on 12 January 2021)
New cars will improve their share slightly
Figure 16: New car sales, by new and used, 2021 and 2025
Cars powered by hybrid and battery technology will increasingly challenge petrol by 2025
Figure 17: New car sales, by type, 2021-25
Market drivers and assumptions
Figure 18: Key drivers affecting Mintel’s market forecast, 2015-25 (prepared on 12 January 2021)
Learnings from the last recession
Figure 19: New car registrations, by volume, 2007-12
Forecast methodology
MARKET SEGMENTATION
Pandemic impacts on both new and used car sales during 2020
Figure 20: New and used car market volumes (UK), million units, 2015-20
Car parc in excess of 30% larger since 2000
Figure 21: Number of licensed cars (Great Britain), million units, 2000-19
Dual-purpose cars have been the big winner since 2015
Figure 22: New car registrations, by category, percentage point change, 2015-20
COVID-19 offers a boost for AFV sales…
Figure 23: Sales of new cars, by fuel type, 2015-20
…although they still account for a small share of the market overall
Figure 24: Number of licensed cars (Great Britain), by fuel type, million units, 2015-20
Older cars are also growing their profile
Figure 25: Age structure of the UK car parc in years, 2015-19
A growing percentage of households now own two or more vehicles
Figure 26: Percentage of households with car availability, England, 2009-19
Car ownership increases outside of urban areas
Figure 27: Household car ownership per household, by rural-urban classification (England), 2018/19
CHANNELS TO MARKET
Franchised dealers dominate
Figure 28: Sales of cars, by channel, 2016-20
Profile of online looks set to strengthen following COVID-19
MARKET DRIVERS
Consumer confidence impacted during 2020 by COVID-19 pandemic
Figure 29: Consumer financial confidence, January 2020-January 2021
Brexit agreement should minimise further economic disruption
Older men are more likely to hold a driving licence
Figure 30: Full car driving licence holders, by age and gender, England, 2019
Cars are the preferred mode of transport for journeys of more than a mile
Figure 31: Mode share of trips, by main mode (different trip lengths), England, 2019
Figure 32: Car transport, Great Britain, March-December 2020
Steady demand for using a car three or more times a week
Figure 33: Frequency of using a private car, England, 2009 and 2019
Leisure is a key use for a car
Figure 34: Trips, by purpose per year, private car *, England, 2009 and 2019
Cost pressures for car owners have moderated recently
Figure 35: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2015-19
Over half of adults plan to buy a car in the next three years
Figure 36: Intention of purchasing a car/s in the next three years, November 2020
Around half of buyers will purchase new in the next three years
Figure 37: Intention of purchasing a car/s in the next three years, by new or used/second-hand purchase, November 2020
Growing restrictions on using a car in urban areas
COMPANIES AND BRANDS – KEY TAKEAWAYS
Digital is a major benefactor of reduced promotional spend
Polarisation of market towards premium and value continues despite COVID-19
Strong positioning is essential for a brand’s success
MARKET SHARE
European brands continue to suffer
Premium brands continue to perform well
Value brands also proving popular
Figure 38: Manufacturer shares of new car registrations, 2014-20
Supermini format increasingly popular
Figure 39: Top 10 new car models, 2018-20
Fragmentation evident amongst used car brands
Figure 40: Top 10 used car models, 2018-20
LAUNCH ACTIVITY AND INNOVATION
INTVO pedestrian detection for self-driving cars
V2X Network offers a platform for autonomous data transactions
Volvo and indoor car air quality
Figure 41: Volvo Advanced Air Cleaner
Apostera offers augmented reality for drivers
ADVERTISING AND MARKETING ACTIVITY
Advertising support sees steady decline since 2016
Figure 42: Recorded above-the-line, online display and direct mail total advertising expenditure by car manufacturers, 2016-20
Spring 2020 lockdown results in sizeable fall in investment
Figure 43: Recorded above-the-line, online display and direct mail total advertising expenditure by car manufacturers, by month, 2019 and 2020
Increasing focus on promoting AFVs
Figure 44: Recorded above-the-line, online display and direct mail total advertising expenditure, by type of car, 2016-20
Most manufacturers have scaled back investment recently
Figure 45: Recorded above-the-line, online display and direct mail total advertising expenditure, by leading car manufacturers, 2016-20
COVID-19 redirects spend towards certain media
Figure 46: Percentage media type split of recorded above-the-line, online display and direct mail total advertising expenditure by car manufacturers, 2019 and 2020
Nielsen Ad Intel coverage
BRAND RESEARCH
Ford outpaces premium German marques when it comes to trust
Figure 47: Attitudes towards and usage of selected brands, November 2020
Key brand metrics
Figure 48: Key metrics for selected brands, November 2020
Brand attitudes: Hyundai and Kia are associated with offering good value
Figure 49: Attitudes, by brand, November 2020
Brand personality: Vauxhall suffers from being boring, VW as being unethical
Figure 50: Brand personality – macro image, November 2020
Brand personality: Micro image analysis illustrates specific strengths and weaknesses
Figure 51: Brand personality – micro image, November 2020
THE CONSUMER – KEY TAKEAWAYS
Easing of worries associated with COVID-19 should stimulate car sales
Targeting the quarter of adults who aren’t car owners shouldn’t be overlooked
Sellers should ensure that they have a strong used focus
Addressing issue of price could stimulate those without a car
A focus on small cars is likely to win business
Technology could act as a hook for older drivers
A broad channel strategy will help with the important over-35 age group
Targeting affluent adults shouldn’t be overlooked by those offering alternatives to car ownership
IMPACT OF COVID-19 ON CONSUMER BEHAVIOUR
Fewer adults are worrying about the risks associated with COVID-19
Figure 52: Worries about risk of exposure to COVID-19, April-December 2020
Fall in those who are shunning non-essential spending
Figure 53: Non-essential spending, April-December 2020
CAR OWNERSHIP
Three quarters of adults are car owners
Figure 54: Car ownership, November 2020
Income is a major factor affecting car ownership
Growing number of adults own a car
Figure 55: Car ownership, 2016-20
AGE OF CAR OWNED
Purchasing used is currently preferred over new
Figure 56: Age of car owned, November 2020
Older adults less likely than other groups to have purchased recently
Men are important buyers of new cars
Income plays a major role in the new car market
New cars are popular for city dwellers
Slowdown in demand for new cars is increasingly evident
Figure 57: Age of car owned, 2016-20
OTHER ACCESS TO CARS
Most non-car owners don’t have a driving licence
Figure 58: Other access to cars, November 2020
Young adults are most likely to not hold a driving licence…
…with income also a factor
Potential market for car purchasers is significant
TYPE OF VEHICLE OWNED
Small-format cars are the most popular choice amongst owners
Figure 59: Type of car owned, November 2020
Small cars are popular with women…
…with young adults another important market
Wealthy favour large and luxury vehicles
Older adults have potential to maintain SUVs’ profile
Recent new car purchasers are going small and adding value
Car owners increasingly want something different
Figure 60: Type of car owned, 2016- 20
INTEREST IN INNOVATIONS
Parking assistance is the most popular innovation sought
Figure 61: Interest in innovations, November 2020
Older adults seek out safety features
Men looking for assistance with day-to-day driving
Self-parking is popular for city dwellers
New car owners show interest in specialist innovations
SUV owners want it all
Affluent and older adults are most interested in innovations
SOURCES OF INFORMATION
Half of adults would rely on digital media for information
Figure 62: Sources of information, November 2020
Young adults seek out a variety of channels
Digital and television are popular with specific groups
New car owners seek out a broad range of channels
Interest in printed media is low for those without a car
Digital is becoming increasingly popular
Figure 63: Sources of information, 2017-20
ALTERNATIVES TO CAR OWNERSHIP
Car hire is the most popular alternative to ownership
Figure 64: Alternatives to car ownership, November 2020
Young adults show the strongest interest in alternatives
Young men prefer car hire, young women car sharing
Affluence is also a factor
Difficulties with car ownership make urban areas an attractive market
Non-car owners interested in informal access
New car owners are an important target group
Those driving the smallest cars are favourable to alternatives
Interest in use of car hire is growing as other methods falter
Figure 65: Alternatives to car ownership, 2015-20
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Data sources
Market sizing and segment performance
Abbreviations
Consumer research methodology