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Vehicle Recovery - UK - September 2010

ISSUES IN THE MARKET
Key issues
Definition
Abbreviations
FUTURE OPPORTUNITIES
New types of cars and new types of ownership
Customer retention through experience
MARKET IN BRIEF
Car sales hit by recession
Costs of vehicle ownership rise
Spending on membership falls
Larger companies pursue affinity marketing opportunities
Breakdown cover largely an intermediary market
INTERNAL MARKET ENVIRONMENT
Key points
Car parc falls for first time since Second World War
Figure 1: UK car parc and new car registrations, 2003-09
Decline in households owning two cars
Figure 2: Household ownership of cars in the UK, 2004-09
Consumer expenditure on personal transport
Figure 3: Consumer expenditure on personal transport compared to total consumer spending, 2004-10
New and second-hand car sales trends
Figure 4: Private new car registrations and used car sales, 2004-09
Impact of the scrappage scheme
Car driving licence holding grows among older age groups
Figure 5: Number of licence holders, by age, 1975/76-2009
Reasons for usage of vehicle recovery services
Figure 6: Most common types of call-out, 2010
BROADER MARKET ENVIRONMENT
Key points
Risk of a double-dip recession?
Figure 7: GDP quarterly percentage change, Q2 2004-Q2 2010
A higher sustained rate of unemployment
Figure 8: Employment and unemployment, by gender, 2005-15
Consumer spending set to recover
Figure 9: GDP, PDI, consumer expenditure and savings, at current prices, 2005-15
Debt-constrained affluence
Figure 10: Forecast adult population trends, by socio-economic group, 2005-15
Young families are a growth opportunity
Figure 11: Trends in the age structure of the UK population, 2005-15
Third age and retired lifestage opportunities
Figure 12: Forecast adult population trends, by lifestage, 2005-15
Smaller households and smaller cars?
Figure 13: UK households, by size, 2005-15
Rising internet penetration
Figure 14: Broadband penetration, 2004-09
COMPETITIVE CONTEXT
Key points
Spending on personal transport
Figure 15: Spending on personal transport, at current prices, 2009
Car ownership becoming more expensive
Figure 16: Annual percentage change in transport costs, 2000-09
Figure 17: Price indices of new and used cars, 2000-09
Maintenance and fuel costs rising
Figure 18: Indices of personal transport prices, 2005-09
Figure 19: Trend in petrol and diesel pump prices, July 2000-July 2009
Car owners using their cars less….
Figure 20: UK car parc and total kilometres driven, 2003-09
...but going on holiday in the UK more
Figure 21: Domestic and overseas holidays and expenditure, 2004-14
STRENGTHS AND WEAKNESSES IN THE MARKET
Weaknesses
WHO’S INNOVATING?
Key points
Green Flag launches iPhone app
Total offers free breakdown cover
Co-operative Insurance offers breakdown cover
Saga launches breakdown repair protection
TomTom launches breakdown service
MARKET SIZE AND FORECAST
Key points
Market recovers from recession
Figure 22: UK vehicle recovery market, by value, 2005-15
 FORECAST
Factors used in the forecast
SEGMENT PERFORMANCE
Key points
Organisation membership suffers in the recession
Figure 23: Segmentation of the vehicle recovery market, by value, at current prices, 2005-10
MARKET SHARE
Key points
Companies maintain market share
Figure 24: Company shares of the vehicle recovery market, by UK membership*, 2006-10
Recovery services pricing
Figure 25: Prices of breakdown recovery products for the AA, RAC and Green Flag, September 2010
Online and voucher discounts
COMPANIES AND PRODUCTS
 MAJOR PLAYERS
The AA
Figure 26: Key financials of The Automobile Association Limited, 2007/08 and 2008/09
RAC
Figure 27: Key financials of RAC Motoring Services, 2008 and 2009
Green Flag
Figure 28: Key financials of Green Flag Limited, 2008 and 2009
Britannia Rescue
Mondial Assistance
Figure 29: Key financials of Mondial Assistance UK Limited, 2008 and 2009
Other companies and brands
Own-label breakdown cover
Car Manufacturer-branded Breakdown Cover
Figure 30: Car manufacturer-branded breakdown cover on new car purchases
Affinity marketing
BRAND COMMUNICATION AND PROMOTION
Key points
Adspend begins to recover
Figure 31: UK main monitored media advertising expenditure on vehicle breakdown and recovery services, 2005-10
Direct mail takes over from TV
Figure 32: Vehicle recovery advertisers spend, by media type, 2005-09 (ranked by last full year, 2009)
Figure 33: Proportion of vehicle recovery adspend, by media type, 2005 and 2009
AA and RAC dominate adspend
Figure 34: Vehicle recovery adspend – top 20 advertisers, 2005-09 (ranked by cumulative total, 2009)
CHANNELS TO MARKET
Key points
An intermediary market
Internet distribution and web aggregators
Aggregators achieve 40% penetration
Figure 35: Usage of price-comparison sites among aggregator adopters, September 2009
Loyalty a rare commodity
Figure 36: Usage of price-comparison websites, by number of price-comparison websites used to obtain quotes/compare prices or to buy financial products, September 2009
Aggregator users focus on price
Figure 37: Most important considerations when using price-comparison sites, September 2009
THE CONSUMER – VEHICLE OWNERSHIP
Key points
Types of vehicle owned
Figure 38: Types of vehicle owned, June 2010
Different vehicle demographic characteristics
THE CONSUMER – BREAKDOWN COVER BRAND AWARENESS AND PENETRATION
Key points
Figure 39: Statements on breakdown cover, June 2010
Younger car owners least likely to have breakdown cover
Older age groups most likely to have cover
AA and Green Flag more upmarket?
AA and RAC stronger among new car owners
Figure 40: Statements on breakdown cover, by ownership of new or used car/van*, June 2010
Younger families less likely to have breakdown cover
THE CONSUMER – HOW COVER WAS ACQUIRED
Key points
Figure 41: How breakdown cover was acquired, June 2010
Breakdown cover mainly an intermediary market
Figure 42: Direct or intermediary purchasing of breakdown cover*, June 2010
Smaller recovery companies more likely to sell through intermediaries
Figure 43: Statements on breakdown cover, by how breakdown cover was acquired, June 2010
APPENDIX – VEHICLE OWNERSHIP
Figure 44: Most popular ownership of vehicle, by demographics, June 2010
APPENDIX – BREAKDOWN COVER BRAND AWARENESS AND PENETRATION
Figure 45: Most popular statements on breakdown cover, by demographics, June 2010
Figure 46: Next most popular statements on breakdown cover, by demographics, June 2010
APPENDIX – HOW COVER WAS ACQUIRED
Figure 47: Most popular how breakdown cover was acquired, by demographics, June 2010

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