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Car Finance - UK - September 2005

INTRODUCTION AND ABBREVIATIONS
Scope of the report
History
Context
Figure 1: Car finance in the context of lending overall, by value and purpose, logarithmic scale, 2005
Concepts
The roles of legal interest and security
Global information and research
Definitions
Consumer research
ACORN
 ABBREVIATIONS
PREMIER INSIGHT
Youngsters want to get moving
On the road to independence
Would you buy a used car from this lender?
‘When the ducks quack, feed them’
Work smarter not harder on the better-off
EXECUTIVE SUMMARY
Background considerations
Industry issues
Market size
The consumer
The future
MARKET DRIVERS
 THE UNDERLYING ASSET
Varoom
Figure 2: Private and light goods vehicles currently licensed, 1997-2004
Trading down?
Figure 3: Comparison of used and new vehicle registrations, 1997-2004
Consumers putting the brakes on?
Figure 4: Comparison of fleet, business and private new car registrations, 1997-2004
 CONSUMER SPENDING AND CONFIDENCE
Less boom, less varoom
Figure 5: Forecast economic indicators, 2005-10
Figure 6: Comparison of trends in savings ratio and new car registrations, 2005-10
Confidence is key
Impact of debt
 COMPETITIVE ENVIRONMENT
Figure 7: Competitive model for industry, 2005
 DEMOGRAPHIC FACTORS
Figure 8: Population profile, by selected age groups and years, 2003-18
Youngsters not making the grade
Figure 9: Trends in holding a driving licence, by age group, 1976-2002
His ‘n’ Hers on the up
Figure 10: Household ownership of cars, by penetration of multiple ownership, 1996-2004
His Not Hers also on the up
Figure 11: Proportion of persons living alone, 25-44 age group (%), 1973-2002
 REGULATION
Removing the blockage
Consumers behaving badly
Figure 12: Individual and company bankruptcies in England and Wales (not seasonally adjusted), 1995-2004
Lenders under pressure
The Information Commissioner puts his oar in
Consumer protection really motoring
Europe in doubt?
MARKET SIZE
Car finance in context
Figure 13: Car POS finance relative to other consumer credit, 2004
Aggregate car finance
Figure 14: Aggregate lending for car purchase, by gross advances, 2000-04
Foot off the accelerator…
Figure 15: Summary data for volume of cars purchased using car finance, 1997-2004
…but hand in the pocket
Figure 16: Summary data for value of point-of-sale car finance, 1997-2004
Average loan values converging slightly
Figure 17: Mean loan values for car finance, by vehicle type, 1997-2004
Used car finance holds up
Figure 18: Value of consumer car finance – new and used cars, by type of product, by gross advances, 1997-2004
Two different markets
Figure 19: Distribution of new car finance, by type of product, by gross advances, 2000-04
Figure 20: Distribution of used car finance, by type of product*, by gross advances, 2000-04
Strategic questions
PRODUCTS
 TYPES OF PRODUCT
Figure 21: Types of car finance, 2005
Asset-based finance
Hire-purchase
Conditional sale
Lease
Personal Contract Purchase
Personal Contract Hire
Other forms of asset-based finance
Non-asset-based finance
Car loans
Unsecured loans
Figure 22: Variation in unsecured lending availability, November 2004
Secured loans
 STRUCTURING OF PRODUCTS
Additional product features
KEY PLAYERS
Figure 23: Main types of car finance provider, June 2005
Manufacturers
Finance houses
Figure 24: Relationships between finance houses and vehicle brands, December 2004
Specialist lenders
Banks
Market share
Personal loans
Figure 25: Market share in personal loans, September 2004
Point-of-sale finance
Figure 26: Earlier estimate of market shares in point-of-sale finance, December 2002
Figure 27: Current estimate of market shares in point-of-sale finance, August 2005
How accurate is this model?
DISTRIBUTION
Point of sale
New cars
Figure 28: Number of franchised motor dealership outlets, 1997-2004
Used cars
Banks
Figure 29: Retail banking branch distribution capacity, mid-2005
Summary of physical distribution
Figure 30: Total physical distribution capacity for car finance, mid-2005
The Internet
Figure 31: Extract from Mintel's Internet Quarterly, by category relevant to car finance, April 2005
ADVERTISING AND PROMOTION
The quantitative picture
Figure 32: Top ten car manufacturer finance advertisers, selected 12-month periods October 2001-April 2005
Figure 33: Top ten Personal Contract Plan advertisers, selected 12-month periods October 2001-April 2005
The qualitative view
Psychological influences
Figure 34: Hierarchy of human needs
Cars and sex
Car finance and…?
INTERNATIONAL CONTEXT
Common global finance
North America
Continental Europe
CONSUMER FINANCIAL ACTIVITY
Consumer confidence remains weak but prospects look more promising
Relationship with the main financial services providers
High levels of activity from June 2005 onwards
Figure 35: Savings, investment, borrowing and debt repayment – consumers’ expected activity, March 2004-June 2005
Younger respondents looking to refresh their financial affairs
Figure 36: Expected financial activity by socio-demographic and income groups, June 2005 and average for the last 14 quarters
More activity than a year ago
Figure 37: Leading financial activities planned in the next six months, June 2004-June 2005
Housing indicators pick up sharply
Figure 38: Intended mortgage and property purchase activity, June 2003-June 2005
HSBC gains ground in terms of MFSPs
Figure 39: Leading main financial services providers: market shares, June 2004-June 2005
Bank of Scotland will gain life and pensions business, Nationwide BS should be strong in savings
Figure 40: Saving, investment and lending market sizes, by expected customer demand and brand leaders (overall % intending to undertake activity in brackets), June 2005
The Scottish banks will have the most active customer bases
Figure 41: Activity levels of main financial providers’ customer bases, June 2005
THE CONSUMER
Figure 42: Overall product penetration, July 2005
 MONEY IS THE KEY
Figure 43: Car ownership overall, July 2005
Figure 44: Car ownershp and purchase intentions, overall and by gender, July 2005
No surprise, then
Figure 45: Car finance, car ownershp and purchase intentions, overall and by gender and socio-economic group, July 2005
Implications
Family drives the need
Figure 46: Car finance, car ownershp and purchase intentions, overall and by lifestage, July 2005
Implications
Other analyses
 TICKING OVER STEADILY
Figure 47: Sources of funds, overall, July 2005
Figure 48: Sources of funds, overall and by gender, July 2005
Figure 49: Sources of funds, overall and by age and socio-economic group, first six responses, July 2005
Implications
Scots tak’ the high road
Figure 50: Sources of funds, overall and by TV region, July 2005
Implications
People carriers
Figure 51: Sources of funds, overall and by own children in household, July 2005
Figure 52: Graphic representation of the pattern of car finance among family groups by own children in household, July 2005
Implications
Keeping them off the streets
Figure 53: Sources of funds, overall and by ACORN group, July 2005
Figure 54: Age profiles of ACORN groups, July 2005
Implications
Other analyses
Relationship to vehicle owned
Figure 55: Analysis of type of finance used, by type of vehicle purchased, July 2005
Implications
CONSUMER ATTITUDES AND TARGETING OPPORTUNITIES
Figure 56: Features important in financing, overall, July 2005
Figure 57: Car finance, features important in financing, overall and by gender, first six responses, July 2005
Implications
Focus on value
Figure 58: Features important in financing, overall and by age and socio-economic group, first six responses, July 2005
Implications
Scots away
Figure 59: Features important in financing, overall and by TV region, first six responses, July 2005
Implications
Family pressure is the key
Figure 60: Features important in financing, overall and by lifestage, first six responses, July 2005
Implications
Other analyses
Features favoured in products
Figure 61: Feature preferences, by financing method, July 2005
Implications
Shades of Arfur Daley
Figure 62: Attitudes towards borrowing, overall, July 2005
Figure 63: Attitudes towards borrowing, overall and by gender, first six responses, July 2005
Implications
Aspiring to the lifestyle
Figure 64: Attitudes towards borrowing, overall and by age and socio-economic group, first six responses, July 2005
Implications
Scots motoring again
Figure 65: Attitudes towards borrowing, overall and by TV region, first six responses, July 2005
Implications
The Italian Job
Figure 66: Attitudes towards borrowing, overall and by own children in household, lifestage and Mintel’s Special Groups, first six responses, July 2005
Implications
Better clutch control in digital marketing
Figure 67: Attitudes towards borrowing, overall and by newspaper readership and technology usage, first six responses, July 2005
Implications
Further analysis
Dealers
Bank reliant
Bargain hunters
The wary
The unaware
Figure 68: Quantitative consumer typology, overall and by gender, July 2005
Figure 69: Quantitative consumer typology, overall and by age and socio-economic group, July 2005
Figure 70: Car finance, consumer attitudes by consumer type, July 2005
CHAID analysis
Figure 71: CHAID analysis of preferences by target group, July 2005
INDUSTRY VIEWS
Cars and sex
The balance of power
THE FUTURE
Whither the car finance market?
Change management
Figure 72: Strategic capability reference model for asset finance and generic lending industries, July 2005
FORECAST
Figure 73: Forecast of aggregate lending for car purchase, by gross advances, 2004-10

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