Car Retailing - UK

Published by: Mintel International Group Ltd.

Published: Aug. 1, 2008 - 137 Pages

Table of Contents

Issues in the Market

Main issues

Definition

Abbreviations

Market in Brief

Key points

Tough times loom ahead

Motoring costs mount up…

…as feel-good factor evaporates

Dealership numbers continue to fall

Problems for some…

…but opportunities for others?

Two in three have a car they use

Purchasing intentions holding up… For now

Dealerships still win on trust

Role of the internet

Alternative fuel attracts - but for differing reasons

Fun for some, stressful for others

Internal Market Environment

Key points

Spending on cars

Figure 1: Consumer expenditure on car purchasing, at current and constant 2001 prices, 2003-08

Motoring costs escalate

Figure 2: Consumer expenditure on car purchasing, servicing & repair and motoring expenses, at current prices, 2003-08

Fuel costs escalate

Figure 3: Average annual retail motor fuel prices*, 1998-2007

Changes to Vehicle Excise Duty

Figure 4: Vehicle Excise Duty rates, 2007/08-2010/11

Charging for road use

Other schemes face rejection

Government presses ahead

Block exemption’s days numbered?

Original aims and criticisms

The future

Colour-coding emissions

Opportunities online…

…but pitfalls for the unwary

Caveat surfer

Broader Market Environment

Key points

PDI and consumer spending continue to rise

Figure 5: Trends in personal disposable income and consumer expenditure, 2003-13

Retail sales growth slows

Figure 6: UK: ONS and BRC: Total retail sales year-on-year growth, July 2007-June 2008

Credit crunch bites

Figure 7: Trends in private new car registrations and finance penetration, 2001-07

Population growth in key groups

Figure 8: Trends in the age structure of the UK population, by gender, 2003-13

More over 65’s? No problem.

Growth in key car buying ages

Growth among ABs, C1s…

Figure 9: Forecast adult population trends, by socio-economic group, 2003-13

…but number of families to stand still

Figure 10: Forecast adult population trends, by lifestage, 2003-2013

Smaller households on the rise

Figure 11: UK household sizes, 2003-13

Women, over-50s get mobile

Figure 12: Full driving licence holders, by age and gender, 1995/97-2006

Rise in car ownership

Figure 13: Number of cars owned by individual households, 1985/86-2006

More cars per person

Figure 14: Number of cars per household and cars per adult aged 17+, 1985/86-2006

Broadband penetration grows

Figure 15: UK Broadband penetration, 2004-08

Market in Context

Key points

Other spending priorities

Figure 16: Expenditure priorities, 2007 and 2008

Strengths and Weaknesses in the Market

Strengths

Weaknesses

Market Size and Forecast

Key points

New registrations set to fall in 2008…

Figure 17: Total new car registrations, by private, fleet and business sales, 2002-08

…while used volumes continue downward trend

Figure 18: Sales of used cars, by volume, 2003-08

Value sales

Figure 19: Value sales of new and used cars, at current prices, 2003-13

Figure 20: Value sales of new and used cars, at constant 2008 prices*, 2003-13

Slow motion

Used cars move forward

Factors used in the forecast

Makes and Models and Dealership Numbers

Key points

Dealer distribution network

Figure 21: Number of UK franchised dealer outlets, 1998-2007

Top ten also decline

Figure 22: Ten largest UK franchised dealer networks, by marque and number of outlets, 2003-07

MPVs take pole position

Figure 23: New car registrations, by product category, 2003-07

Ford and Vauxhall the dominant brands

Figure 24: Manufacturer shares of new car registrations, 2003-07

Retail Market Shares

Key points

The big get bigger

Figure 25: Top ten UK car dealers, by turnover, number of outlets and market share, 2005 and 2007

Consolidation continues…

…but what is driving it?

Corporate activity

Retailer Profiles

Pendragon plc

Figure 26: Pendragon UK, sales and operating performance, 2003-07

Inchcape

Figure 27: Inchcape UK*, financial performance, 2003-07

Sytner Group

Figure 28: Sytner Group Limited, financial performance, 2003-06

Arnold Clark

Figure 29: Arnold Clark Ltd, financial performance, 2002-06

Lookers

Figure 30: Lookers Plc, financial performance, 2003-07

Jardine Motors Group

Figure 31: Jardine Motors Group UK Ltd, financial performance, 2003-06

Camden Group Services

Greenhouse Group

Figure 32: Greenhous Group, financial performance, 2006 and 2007

Vertu Motors

Factory-owned dealer groups

Mercedes-Benz Retail

Ford Retail Group

Reagroup

Robins & Day

Car supermarket operators

Carcraft

Car Giant

Motorpoint

Online/phone retailers

Autotrader.co.uk

eBaymotors.co.uk

Jamjar.com

Oneswoop.com

Who Uses Cars?

Key points

Two in three have use of car

Figure 33: Presence of car in household that respondent currently drives, June 2008

Impact of gender and age

Figure 34: Consumers stating whether they currently drive a car in their household, by gender and age, June 2008

Got kids? Get a car

Figure 35: Consumers stating whether they currently drive a car in their household, by age of own children in household, June 2008

Couples outweigh singles

Figure 36: Consumers stating whether they currently drive a car in their household, by lifestage, June 2008

Wealth equals wheels

Figure 37: Consumers stating whether they currently drive a car in their household, by socio-economic group, June 2008

The Credit Crunch and Buying Intentions

Key points

Most potential buyers unfazed - for now

Figure 38: Impact of credit crunch on car buying plans over next two years, June 2008

Non-buyers are women, over-55s

Figure 39: Consumers stating that they aren’t planning to buy a car in the next two years, by gender and age, June 2008

Parents of teens not keen on buying

Figure 40: Consumers stating that they aren’t planning to buy a car in the next two years, by age of own children in household, June 2008

Young aspire to their own cars

ABs key for new car sales

Figure 41: Impact of the credit crunch on car buying plans over the next two years, by socio-economic group, June 2008

How People Go About Buying Cars

Key points

Figure 42: How consumers would consider going about buying a car, June 2008

Traditional dealers the preferred option

Internet remains small, but isn’t insignificant

Figure 43: How consumers would consider going about buying a car, dealer/web comparisons, June 2008

Online research, not sales driven right now

Trusted dealer more important to men, older respondents and ABs

Figure 44: Consumers that would go about buying a car by dealing with a dealership they know, by gender, age and socio-economic group, june 2008

Young, free, and flicking through the papers

Figure 45: Consumers that would use the press (eg Autotrader) when looking to buy a car, by detailed demographics, June 2008

Younger consumers enthuse online - but would they buy?

Figure 46: Consumers that would use the web to compare or buy a car directly, by age, June 2008

Figure 47: Types of activity undertaken on the internet in the last three months, by age, April 2008

Buying online, direct from a manufacturer

Factors Influencing Choice of Dealer

Key points

Figure 48: Factors influencing choice of dealer, June 2008

The price is right - for a deal

Internet influences few

Selling the service

Age equals experience

Figure 49: Consumers stating the importance of previous dealer experience, when deciding which dealership to buy from, by age, June 2008

ABs, C2s talk the talk

Figure 50: Consumers that feel it important that a dealership is happy to negotiate on price, by socio-economic group, June 2008

Are you being serviced?

Figure 51: Consumers that feel good after-sales service and knowledgeable staff are important factors in determining dealership choice, by gender, age and socio-economic group, june 2008

Factors Influencing Car Purchase

Key points

Figure 54: Environmental factors influencing car purchase, June 2008

Green issues to the fore - but what’s the motivation?

Cost of fuel a deterrent

Mixed views of hybrids

The affluent look to save money

Figure 55: Consumers that agree with the statement ‘I’d buy an environmentally friendly car if it helps me avoid extra taxes/congestion charges’, by gender, age, socio-economic group, gross annual household income and region, June 2008

Families, third agers look to emissions

Figure 56: Consumers that agree with the statement ‘I would always consider environment factors (eg low CO2 emissions) when buying a new or used car’ by gender, age, socio-economic group, marital status, lifestage and age of own children in household, June 2008

Appendix: Who Uses Cars?

Figure 66: Presence of car in household that respondent currently drives, by detailed demographics, June 2008

Appendix: The Credit Crunch and Buying Intentions

Figure 67: Impact of credit crunch on car buying plans over next two years, by detailed demographics, June 2008

Appendix: How People Go About Buying Cars

Figure 68: How consumers would consider going about buying a car, by detailed demographics, June 2008

Figure 69: How consumers would consider going about buying a car, by detailed demographics (continued), June 2008

Appendix: Factors Influencing Choice of Dealer

Figure 70: Factors influencing choice of dealer, by detailed demographics, June 2008

Figure 71: Factors influencing choice of dealer, by detailed demographics (continued), June 2008

Figure 72: Factors influencing choice of dealer, by detailed demographics (continued), June 2008

Appendix: Factors Influencing Car Purchase

Figure 76: Environmental factors influencing car purchase, by detailed demographics, June 2008

Figure 77: Environmental factors influencing car purchase, by detailed demographics (continued), June 2008

Abstract

This report addresses the car retail market in the UK, discussing current trends and issues in the market and future prospects, last examined by Mintel in its report Car Retailing - UK, Retail Intelligence, August 2006.

Mid-2008 marks a worrying time for car retailers. The headlines are dominated by economic gloom, and new car sales appear to have gone into reverse, with little prospect of recovery during the second half of the year.

Meanwhile, motorists have to pay more than ever before simply to keep their cars on the road, including higher fuel costs, as the price of oil soars, car tax and, in some areas, congestion charging.

Consolidation has continued within the industry, with larger dealer groups achieving ever-greater scale: with some businesses likely to struggle during the current economic downturn, there are likely to be further opportunities to make acquisitions for those with the resources to afford them.

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