UK Car Review - UK - February 2017

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Car sales reach all time high
Figure 1: UK new and used car sales, by volume, 2011-21
Smaller format cars account for over a third of new sales
Figure 2: New car registrations by broad segment (share), 2016
Cars are the preferred mode of transport for many
Figure 3: Mode share (average distance travelled), England, 2015
Companies, brands and innovation
A highly fragmented market
German brands are strongly differentiated from others in the market
Figure 4: Attitudes towards and usage of selected brands, January 2017
Investment in advertising remains largely stable
Innovation for all
The consumer
Most adults own a car
Figure 5: Car ownership, November 2016
New and used cars are both popular
Figure 6: Age of car owned, November 2016
Most adults who don’t own a car also don’t have access to one either
Figure 7: Non car ownership, November 2016
Small and medium-sized vehicles dominate the market
Figure 8: Type of car owned, November 2016
Petrol is the most popular fuel for cars
Figure 9: Fuel used with main car, November 2016
Commuting is a key use for a car
Figure 10: Reasons for using a car, November 2016
Improvements to current technology is more important than the introduction of new technology
Figure 11: Future demands from suppliers, November 2016
What we think
ISSUES AND INSIGHTS
New car sales suffer from slowdown in expansion
The facts
The implications
What future for diesel?
The facts
The implications
Can growth in hybrid and electric cars be maintained?
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
2016 sees car sales of 10 million+ for the first time
New car sales have been the stronger segment recently
Smaller and more versatile vehicles are proving popular with buyers
Franchised dealers dominate sales channels
Growing car sales fail to raise car ownership
Cars dominate over other transport alternatives
MARKET SIZE AND FORECAST
Car sales surpass 10 million per year for the first time
Figure 12: UK new and used car sales, by volume, 2011-21
Figure 13: Best- and worst-case forecasts for UK new and used sales, 2011-21
Forecast methodology
The impact of the EU referendum vote
Market performing better than could have been expected
Figure 14: Alternative market scenarios for the post-Brexit car market, at current prices, 2016-21
Figure 15: Detailed post-Brexit scenarios for UK new and used car sales, at current prices, 2016-21
Wider demand for vehicles is set to soften after a period of expansion
MARKET SEGMENTATION
New car sales continue their upward trend
Figure 16: New and used car market volumes, 2011-16
Car parc expansion is also being accompanied by car parc ageing
Figure 17: Age structure of the car parc in years, 2011-15
Dual and multipurpose vehicles benefit from increased interest
Figure 18: New car registrations, by broad segment, 2011-16
… although it is mini/supermini and lower and upper medium that continue to dominate
Figure 19: New car registrations by broad segment (share), 2011-16
Interest in smaller and more versatile vehicles is evident from buyers
Figure 20: New car registrations by category, 2005, 2010 and 2015
Popularity of diesel appears to stall
Figure 21: Sales of cars by fuel type, 2011-16
CHANNELS TO MARKET
Franchised dealers account for nearly half of all sales
Figure 22: Sales of new and used cars, by channel, 2013-15
MARKET DRIVERS
Mixed messages when it comes to the affordability of motoring
Figure 23: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2011-15
Little evidence that growing car sales are increasing car ownership
Figure 24: Percentage of households with car availability, in England, 2005-15
Number of trips being taken is in decline
Figure 25: Trips, distance travelled and time taken, 2005-15
Cars still dominate when compared to other transport options
Figure 26: Mode share (average distance travelled), England, 2015
Cars favoured most for commuting and shopping…
Figure 27: Importance of transport types by specific reasons for travelling (England), 2014
… as well as by a cross section of adults
Figure 28: Mode share (average distance travelled), England, 2015
Over half of adults plan to buy a car in the next three years …
Figure 29: Do you or someone else in your household plan to buy a car(s) within the next 3 years, February 2016
… although there is no obvious preference towards buying new or used
Figure 30: Intention of purchasing a car/s in the next three years, by new or second-hand purchase, February 2016
Hybrid and electric cars set to play a greater part in the market
Figure 31: Hybrid and electric new car registrations (Great Britain), by volume*, 2011-21
Number of larger households continues to increase
Figure 32: Changes in single and multi-person households, 2006-15
UK population both growing and ageing
Figure 33: Trends in the age structure of the UK population, 2011-21
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Established manufacturers see market share fall back
Smaller models remain popular with buyers
Innovation addressing all aspects of driving
Advertising expenditure is growing although directed towards particular types of car
Not all brands perceived the same
MARKET SHARE
Ford, Vauxhall and Volkswagen suffer a reversal in their fortunes
Premium marques continue to make ground as consumers trade up
Value brands are also growing in popularity illustrative of further polarisation
Figure 34: Manufacturer shares of new car registrations, 2010, 2012, 2014 and 2016
Performance of Nissan, Land Rover, Jaguar and MINI illustrates good performance for UK producers
Smaller models dominate sales
Figure 35: Top 10 car models, 2016
LAUNCH ACTIVITY AND INNOVATION
Hyundai looks at multiple power trains for its Ioniq model
Autodrive offering support for autonomous driving
Volvo combines safety with features
Honda Sensing offers new level of driver awareness
Gesture control beginning to take off
Ford partners with Amazon’s Alexa
ADVERTISING AND MARKETING ACTIVITY
Promotional expenditure on an upward trajectory
Figure 36: Recorded above-the-line, online display and direct mail total advertising expenditure by car manufacturers, 2012-16
Family cars and 4x4 categories dominate activity
Figure 37: Recorded above-the-line, online display and direct mail total advertising expenditure, by type of car, 2012-16
Advertising expenditure closely mirrors market position
Figure 38: Recorded above-the-line, online display and direct mail total advertising expenditure by leading car manufacturers, 2012-16
Television advertising is the clear winner as other channels suffer from mixed fortunes
Figure 39: Percentage media type split of recorded above-the-line, online display and direct mail total advertising expenditure by car manufacturers, 2012-16
Nielsen Ad Intel coverage
BRAND RESEARCH
Most German brands are performing well
Figure 40: Attitudes towards and usage of selected brands, January 2017
Key brand metrics
Figure 41: Key metrics for selected brands, January 2017
Brand attitudes: German brands are positioned well against quality
Figure 42: Attitudes, by brand, January 2017
Brand personality: Volkswagen continues to be associated as being unethical
Figure 43: Brand personality – Macro image, January 2017
Reliability differentiates many mass-market brands
Figure 44: Brand personality – Micro image, January 2017
THE CONSUMER – WHAT YOU NEED TO KNOW
A majority of adults own a car
Car ownership can be broadly split between new and used vehicles
Small and medium-sized vehicles are popular
Petrol is the most popular fuel
Commuting and shopping dominate key uses for a car
Drivers are looking for improvements rather than innovation
CAR OWNERSHIP
7 out of 10 adults currently own a car
Figure 45: Car ownership, November 2016
Wealth, gender and location are some of the factors that influence car ownership
Despite variations in ownership, the percentage of adults with a car is growing
Figure 46: Car ownership, 2014-16
AGE OF CAR OWNED
Broad spread of car owned by age
Figure 47: Age of car owned, November 2016
Older adults prefer owning used
Income is a major factor affecting choice
Londoners have a preference for buying new
Rising new car sales boost profile of those with a vehicle purchased new within the last 2 years
Figure 48: Age of car owned, 2014-2016
NON CAR OWNERSHIP
Most non car owners don’t have access to any vehicle
Figure 49: Non car ownership, November 2016
Young adults benefit in more affluent households
TYPE OF CAR OWNED
Small and medium-sized vehicles are most popular with car owners
Figure 50: Type of car owned, November 2016
Small cars popular with young adults
London – A market for compact and luxury cars
SUVs attract older, rural and wealthier owners
Compact cars are more likely to have been purchased in the last two years
Medium saloon/hatchbacks make progress when it comes to ownership
Figure 51: Car ownership, 2014 and 2016
FUELS USED WITH MAIN CAR
Majority of cars owned are powered by petrol
Figure 52: Fuel used with main car, November 2016
Older adults have a preference for diesels
Use of petrol and diesel appears linked with location
London records the strongest penetration of hybrids
New car buyers appear to have switched towards diesel
Diesel is popular with larger cars
REASONS FOR USING A CAR
Commuting is the main reason for using a car
Figure 53: Reasons for using a car, November 2016
Older adults find different uses for their cars
Shopping dominates for less affluent, commuting for most affluent
FUTURE DEMANDS FROM SUPPLIERS
Improvements to existing engines dominate over other demands
Figure 54: Future demands from suppliers, November 2016
Technical and environmental improvements are popular with young adults and those with children
Men are interested in alternative power sources
Those living in London are keen on vehicle features
Presence of children drives interest in particular vehicle features
Owners of older, used, cars show least interest in improvements
Owners of compact cars exhibit strong environmental demands
Diesel owners seem more demanding than those with petrol vehicles
CHAID analysis
Methodology
Wealthy, urban adults hold good prospects for connectivity enhancements
Figure 55: UK Car Review – CHAID – Tree output, November 2016
Figure 56: UK Car Review – CHAID – Table output, November 2016
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Data sources
Exclusions
Market sizing and segment performance
Fan Chart Forecast
Abbreviations
Consumer research methodology