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Car Purchasing Process - UK - March 2018

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Car sales soften in 2017 after peaking in 2016
Figure 1: UK new and used car sales, by volume, 2012-22
Used cars dominate the market
Figure 2: New and used car sales, by volume, 2012-17
Demand for diesel falls as negative publicity grows
Figure 3: Sales of new cars, by fuel type, 2012-17
Franchised dealers account for over half of all sales
Figure 4: New and used car volumes, by channel, 2017
Companies and brands
Premium brands are proving popular with buyers
Highly competitive market where acquisitions are an important feature
Advertising expenditure expands
The consumer
70% of adults own a car
Similar percentage of adults have bought new and used cars
Main dealers are the most important sales channel
Figure 5: Where last car was purchased, December 2017
Over half of adults plan to buy a car in the next three years…
Figure 6: Intention to purchase a car in the next three years, December 2017
…with the coming 12 months especially significant
Figure 7: Timescale for purchasing a car in the next three years, December 2017
New cars dominate planned purchases
Figure 8: Likelihood of new or used purchase, December 2017
Petrol is the preferred fuel choice when purchasing a car with hybrid technology second
Figure 9: Preference for future fuel types, December 2017
Technology to assist parking a car is popular
Figure 10: Innovations sought by buyers, December 2017
Savings and part-exchange of a car dominate as payment methods
Figure 11: Methods of payment for next car, December 2017
What we think
ISSUES AND INSIGHTS
Sellers set for challenging market conditions
The facts
The implications
Demand for diesel plummets
The facts
The implications
Young are selective towards technical innovations
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Car sales fall back in 2017 after peaking in 2016
Business and fleet sales perform stronger than the private market
Diesel falls out of favour as a fuel
Franchised dealers increasingly dominate market
More and more consumers uncertain about their finances
Alternatives to car ownership are proving popular
MARKET SIZE AND FORECAST
Sales peak in 2016 with a fall in purchases registered in 2017
Figure 12: UK new and used car sales, by volume, 2012-22
Figure 13: Forecast for UK new and used sales, 2012-22
Forecast methodology
MARKET SEGMENTATION
Used cars dominate sales
Figure 14: New and used car market volumes, 2012-17
South East, South West and East all record an increase in share of sales
Figure 15: New car registrations, by region, United Kingdom, 2012-16
Business and fleet sales performing the strongest
Figure 16: UK new registrations of motor vehicles, 2012-17
Personal purchases by men and women are in decline
Figure 17: New car registrations by keeper, Great Britain, 2012-16
Demand for dual and multipurpose vehicles grows…
Figure 18: New car registrations, by broad segment, 2012-17
…from all sectors of the buying market
Figure 19: Share of vehicle types amongst private purchasers, 2012 and 2017
Petrol dominates as diesel falls out of favour amongst buyers
Figure 20: Sales of new cars, by fuel type, 2012-17
CHANNELS TO MARKET
Franchised dealers benefit from recent buoyant new car sales
Figure 21: Sales of new and used cars, by channel, 2013-17
Dealers see growth in their share of used car sales
Figure 22: Sales of new and used car volumes, by channel, 2013-17
Dealer network continues to shrink
Figure 23: Number of UK franchised dealer outlets, 2008-18
Strong new car sales boost franchised market
Figure 24: Top 10 main dealership groups in the UK, by turnover, 2016
Independent sector dominated by car supermarkets
Figure 25: Top 10 independent dealership groups in the UK, by turnover, 2016/17
Growing interest in alternative ways of retailing
Figure 26: Dedicated manufacturer online portals (UK), 2017
MARKET DRIVERS
Decline in those who view financial situation as healthy during 2017
Figure 27: Respondents who describe their financial situation as ‘healthy’, January 2016-September 2017
Loan rates continue to be attractive…
Figure 28: Monthly percentage values of selected interest rates, January 2012-December 2017
…helping to stimulate consumer lending
Figure 29: Value of advances (£m) on sales of all cars bought on finance by consumers through dealerships, 2012-17
Inflationary pressures evident since 2015…
Figure 30: Annual change in CPI, Q1 2006-Q4 2017
…impacting on motoring costs
Figure 31: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2012-16
Cost of car insurance is also rising
Figure 32: Average premium for comprehensive car insurance policies, 2012-17
Alternative ways of accessing a car are proving of interest
Figure 33: Alternatives to car ownership, 2015 and 2017
Figure 34: Car club vehicle and membership growth, 2008-17
Taxi and private hire licences approach 300,000
Figure 35: Total licensed taxi and private hire vehicles (England and Wales), 2007-17
Public transport is another challenger to car ownership
Figure 36: Public transport passenger journeys (Great Britain), 2006/07-2016/17
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Premium brands are proving popular with buyers
Acquisitions are an important way of competing in the market
Sellers looking at different ways of attracting buyers
Advertising expenditure shows steady increase
MARKET SHARE
Established players suffer as buyers look for something different
Premium brands are proving attractive to buyers
Brands that offer something different are also attractive to buyers
Figure 37: Manufacturer shares of new car registrations, 2011-17
Fragmentation increasingly evident when it comes to model share
Figure 38: Leading new car models, 2014-17
Traditional models still dominate used car sales
Figure 39: Leading used car models, 2016 and 2017
COMPETITIVE STRATEGIES
Acquisitions are an important feature of the market
Partnering to help strengthen brand presence
LAUNCH ACTIVITY AND INNOVATION
Škoda entices customers with Live Tour
Figure 40: Škoda live tour
Growing interest in using retail sale environments
PSA looks at cross-sectoral opportunities
ADVERTISING AND MARKETING ACTIVITY
Expenditure up 29% between 2013 and 2017
Figure 41: Recorded above-the-line, online display and direct mail total advertising expenditure by UK car dealers, 2013-17
Investment is focused on the two annual numeric number plate changes
Figure 42: Recorded above-the-line, online display and direct mail total advertising expenditure by UK car dealers, monthly share of annual expenditure, 2016 and 2017
Webuyanycar.com dominates the market
Figure 43: Leading UK car dealers: Recorded above-the-line, online display and direct mail total advertising expenditure, 2013-17
Radio and television dominate
Figure 44: UK car dealers: Recorded above-the-line, online display and direct mail total advertising expenditure, by media type, 2013-17
Nielsen Ad Intel coverage
THE CONSUMER – WHAT YOU NEED TO KNOW
Car ownership steady at 70% of adults
Main dealers are the most important sales channel
Over half of adults plan to buy a car in the coming three years
Petrol is increasingly favoured over diesel
Assistance with parking is popular with drivers
Many buyers look to avoid debt
CAR OWNERSHIP
Car ownership stands at 70%
Figure 45: Car ownership, December 2017
Large families and income are key in influencing car ownership
Car ownership appears to have stagnated since 2016
Figure 46: Car ownership, 2014-17
Similar percentage of adults have bought new and used cars
Figure 47: Age of car owned, December 2017
Affluence has a strong impact on ownership of new cars
Age impacts on choice
Men are important owners of new cars
Londoners prefer to buy new
As with ownership, new car purchases within the last two years have also stalled
Figure 48: Age of car owned, 2014-17
Most non-car owners don’t drive
Figure 49: Non-car ownership, December 2017
Age, gender and affluence are all associated with not owning a car
WHERE LAST CAR WAS PURCHASED
Main dealers dominate recent purchases
Figure 50: Where last car was purchased, December 2017
Young and old have different preferences
Income and socio-economic status differentiate those using a main dealer
Online popular with young women
Current owners of new cars are also likely to be future new car owners
Main dealers increasingly dominate as private sales fall back
Figure 51: Where last car was purchased, 2012-17
CAR PURCHASING INTENTIONS
Over half of adults plan to buy a car in the next three years
Figure 52: Intention to purchase a car in the next three years, December 2017
Young adults and men are key markets
Socio-economic status also strong indicator of purchasing intentions
Families are key buyers
New car owners more likely to be future buyers
Stagnation evident when it comes to future purchase intentions
Figure 53: Intention of purchasing a car/s in the next three years, 2015-17
For those planning to purchase the next year will be significant
Figure 54: Timescale for purchasing a car in the next three years, December 2017
Young adults are more likely to buy sooner rather than later
Rural buyers look like they will wait
Recent new car purchasers are key purchasers
Surge in planned purchases during the coming 12 months
Figure 55: Timescale for purchasing a car in the next three years, 2015-17
New cars dominate planned purchases
Figure 56: Likelihood of new or used purchase, December 2017
Women remain focused on used or are undecided
Younger adults are more likely to buy used
Current car owners are more likely to buy new
Interest in buying a new car continues to grow
Figure 57: Intention of purchasing a car/s in the next three years, 2015-17
INTEREST IN FUEL TYPES
Petrol dominates with hybrid a second choice
Figure 58: Preference for future fuel types, December 2017
Men and young adults show the strongest interest in alternative fuels
Wealthy adults are a key target for new fuels
Diesel remains popular with parents and larger households
Non-car owners are less likely to not have a specific fuel in mind
Hybrid and electric cars increasingly become a mainstream alternative
Figure 59: Preference for future fuel types, 2016-17
INNOVATIONS SOUGHT BY BUYERS
Help with parking is a popular area for technology
Figure 60: Innovations sought by buyers, December 2017
Low interest in many technical features from youngest buyers
Young men are an important group for emerging technology
High income earners are a valuable market
Current car owners are more interested in innovations
Older adults want more features
METHODS OF PAYMENT
Avoiding debt through the use of savings or an asset dominate as payment methods
Figure 61: Methods of payment for next car, December 2017
Credit is popular with younger adults
Wealthy are more likely to use a variety of finance methods
PCP is of particular interest to current and new car owners
Adults aged 25-34 are more likely to use multiple payment options
More and more payment choices are being considered
Figure 62: Methods of payment for next car, February and December 2017
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Data sources
Exclusions
Market sizing and segment performance
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Forecast methodology
Forecast Tables
Figure 63: New and used car market sales, by volume, 2012-22
Figure 64: Forecast of new and used car sales, by volume – best- and worst-case scenarios, 2017-22

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