Table of Contents
Introduction and Abbreviations
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- Definitions
- Research methodology
- Consumer research
- ACORN
- Abbreviations
Premier Insight
Executive Summary
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- A difficult year for new car dealers
- Poor prospects for 2006
- Lower sales and prices lead to fall in new car market value
- Used car market was more resilient but still declined
- Negative factors affecting consumers
- Motoring costs mushroom largely due to higher-cost servicing
- Dealers sell more used cars as new car penetration falls
- Nearly-new cars may be helping online sales
- ABs are confident new car buyers but may stray for servicing
- Older drivers are key customers for franchised dealerships
- Youngest and poorest confined to older used cars
- Price, aftersales and dealer reputation key to the buying decision
- Still widespread perception that new car prices are too high
- Internet research up as readiness to buy online drops
- More research makes consumers a harder sell
- Consumers unmoved by impressive showrooms
- Women improving their car knowledge
- Most manufacturers using quality standards to control dealers
- Consolidation pressure intensified by revised rules
- The rise of the ‘superdealer’
- Global overcapacity a major problem for dealers
- Showroom standards exacerbate rising dealer costs
- Dealer viability under threat
- No rush to multi-franchising
- No sea change in servicing
- Economic restraints on consumers may limit future demand
- Dealers and outlets may grow in size
Industry Issues and Insights
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- Recent market performance
- Constraints on consumers limit new car retail
- Used market performance
- Segment sales performance
- Rise of the small car
- Is model variation a route to better dealer margins?
- Relative dealer performance
- Car supermarkets
- Channel leakage may weaken franchised dealers
- Global oversupply continues to constrain dealers
- Impact of the new Block Exemption
- Main aims of the revised regulation
- New rules mainly benefiting larger groups
- Block Exemption: spot the difference?
- No stampede to sell multiple brands
- Clarification required on multi-franchising
- No significant effect so far
- No fast fit for the servicing market
- Longer service intervals
- Dealership profitability
- Dealer revenues under threat
- POS finance income declining
- New regulatory burden may impact insurance sales
- Rising costs annihilate dealer margins
- A showroom upgrade too far?
- Franchise standards are costing dealers
- Showrooms may be surplus to requirements
- Dealer margins barely visible
- Dealers demand more from manufacturers
- What are dealers doing about it?
- Consumer behaviour
- Car buying and the Internet
- Internet research changes shopping behaviour
- Showrooms and garages still required
- Factors important to car-buying consumers
- Economics more influential than environmental issues
- Income availability defines the car-buying consumer
- Legislation and regulation
- Industry unimpressed by government green initiatives
- Mixed reactions to VED banding
- More regulation feared by dealers
Retail Sales
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- New car sales
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- Figure 1: Private new car registrations, 2000-06
- Private sales lead the 2005 decline
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- Figure 2: Total new car registrations, by private, fleet and business sales, 2000-06
- Record share for diesel
- Depression continues into 2006
- Seasonality
- New car market value and pricing
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- Figure 3: Value of new car sales, at current and constant prices, 2000-06
- Used car sales
- Volume sales
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- Figure 4: Volume of used car sales, 2000-06
- Used car market value
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- Figure 5: Value of used car sales, at current and constant prices, 2000-06
- Segmentation – new cars
- New car sales by product category
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- Figure 6: New car sales, by product category, 2001-05
- New car sales by marque
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- Figure 7: Manufacturer shares of new car registrations, 2001-05
Consumer Expenditure
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- Private car spend fell in 2005
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- Figure 8: Consumer expenditure on car purchasing, at current and constant 2001 prices, 2001-06
- Figure 9: Consumer expenditure on car purchasing, at current and constant 2001 prices, 2001-06
- Servicing & repair spend escalates
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- Figure 10: Consumer expenditure on car purchasing, servicing & repair and motoring expenses, at current prices, 2001-06
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- Figure 11: Consumer expenditure on vehicle purchasing, servicing & repair and motoring expenses, at constant 2001 prices, 2001-06
Retail Structure
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- New car retailing
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- Figure 12: Number of UK franchised dealer outlets, 1996-2005
- Failures up in a tough market
- Suffer little dealers
- Number of franchised dealerships forecast to grow
- Rise of the ‘superdealer’
- Pendragon snaps up Vardy…
- …but remains hungry
- Major dealer groups gather strength
- New regulations may be spurring consolidation
- Location clause removed
- Market consolidation
- What is driving consolidation?
- New car dealerships by marque
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- Figure 13: Number of UK franchised dealer outlets, by marque, 2001-05
- Used car retailing
- New car boom leads to influx of nearly-new cars
- Pre-registration dilemma for dealers
- Used cars become more crucial to franchised dealers
- Independent dealerships
- Car supermarkets
- Other retail channels
- Car auction companies
- Car importers
- Online car retailers
Market Factors
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- More older consumers is good for new car sales
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- Figure 14: Total UK population, by age group, 2001-11
- Car parc rising faster than population
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- Figure 15: Trends in UK population and car parc, 2001-11
- Growth in affluent consumers a likely positive factor
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- Figure 16: UK adult population, by socio-economic group, 2001-11
- Increase in unemployment may damage car demand
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- Figure 17: Structure of the UK working population, by gender, 1996-2011
- Strong growth in PDI and consumer expenditure
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- Figure 18: PDI and consumer expenditure, at current and constant 2001 prices, 2001-11
- Number of UK driving licence holders
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- Figure 19: Full driving licence holders, by age and gender, 1992/1994-2004
- The costs of motoring
- Substantial tax revenues raised from motoring
- Tax incentives for cleaner diesel cars
- New road tax structure based on emissions
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- Figure 20: Vehicle Excise Duty rates, from 23 March 2006
- Use of greener fuels encouraged by taxation
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- Figure 21: Main effective* fuel duty rates, 1996-06
- Petrol prices continue to soar
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- Figure 22: Average annual retail motor fuel prices*, 1996-2006
- Car financing costs
- Pressure for more road pricing
- Legislative and regulatory factors
- Block Exemption regulations
- Location clause removed from October 2005
- VAT rebates boosted 2004 dealer profits
The Consumer
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- Key consumer findings
- Car ownership
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- Figure 23: Car ownership and age of most recently obtained car, by demographic sub-group, 2005
- Penetration of driving licences
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- Figure 24: Type of driving licence held, by demographic sub-group, 2005
- Mintel’s consumer research
- Driving population
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- Figure 25: Respondents that already drive, and those that currently do not drive but plan to do so in the next 12 months, by gender, age and social grade, May 2006
- Source of car purchase
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- Figure 26: Source of car purchase, January 2002, February 2004 & May 2006
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- Figure 27: Source of car purchase, by gender, age and socio-economic group, May 2006
The Consumer – Detailed Consumer Demographics
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- Figure 28: Respondents that already drive, and those that currently do not drive but plan to do so in the next 12 months, by lifestage, Mintel’s Special Groups, region, ACORN category, media usage, commercial TV viewing and source of regular grocery shopping, May 2006
- Source of purchase
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- Figure 29: Source of purchase of car, by lifestage, Mintel’s Special Groups, region, ACORN category, media usage, commercial TV viewing and source of regular grocery shopping, May 2006
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Consumer Attitudes and Typologies
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- Key consumer findings
- Car consumer typologies
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- Figure 30: Car consumer typologies, May 2006
- Price-led (28%)
- Car-savvy (19%)
- Loyalists (17%)
- Unconcerned (36%)
- Females relatively loyal while males more motivated by price
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- Figure 31: Car consumer typologies, by gender, age and socio-economic group, May 2006
- Key issues and themes
- Consumer attitudes
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- Figure 32: Consumer attitudes towards car buying, 2002, 2004 and 2006
- Car choice based on more than just looks and performance
- Internet research up but willingness to buy online down
- More enthusiasm for used cars online
- Consumers less confident as sales pressure rises?
- Showroom upgrades don’t necessarily deliver more customers
- Intention to buy
- Youngsters keen to own their dream car
- Car aspirations may exceed income level
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- Figure 33: Consumers planning to buy a new or used car in the next 12 months, those who research before they buy, and those who always return to the same dealer, by gender, age and socio-economic group, May 2006
- Purchasing behaviour
- Male-oriented industry tends to neglect the female audience
- Mature consumers guided by experience
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- Figure 34: Consumers who decide what make/model before visiting showroom, those who are confident buying new and used, and those who always return to the same dealer, by gender, age and socio-economic group, May 2006
- The Internet and price comparisons
- Car-savvy women
- Young family-aged consumers most likely to buy a new car online
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- Figure 35: Consumer attitudes towards car research and buying new and used cars over the Internet, by gender, age and socio-economic group, May 2006
- Factors determining where consumers buy
- Price comes first
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- Figure 36: Factors important in determining source of car purchase, May 2006
- Fine line between helpful and pushy?
- Only 3% of consumers influenced by nice showroom
- Under-44s most concerned about price
- ABC1s and younger consumers likely to have particular spec in mind
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- Figure 37: Factors that determine source of purchase, relating to price, trade-in value, and range or specification of cars available, by gender, age and socio-economic group, May 2006
- Reputation of dealer more important to women
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- Figure 38: Factors relating to dealer reputation and experience, aftersales service and showroom advice, by gender, age and socio-economic group, May 2006
- Consumer attitudes towards car pricing, range of brands and servicing
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- Figure 39: Consumer attitudes towards car pricing, range of brands and car servicing, 2004 and 2006
- 45% of consumers still feel ripped off by new car prices
- More consumers like single-brand than multi-brand dealerships
- Little change in servicing
- Attitudes towards car prices
- What a rip-off
- But are prices falling?
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- Figure 40: Consumer attitudes towards car pricing, by gender, age and socio-economic group, May 2006
- Range of brands/manufacturers
- ABs less keen than average on multi-franchise dealerships
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- Figure 41: Consumer attitudes towards the range of car brands, by gender, age and socio-economic group, May 2006
- Car servicing issues
- ABs open to use of non-franchised garages
- Focus on longer-term customer relationships required
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- Figure 42: Consumer attitudes towards car servicing, by gender, age and socio-economic group, 2006
Consumer Attitudes and Typologies – Detailed Consumer Demographics
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- Figure 43: Intention to buy, by lifestage, Mintel’s Special Groups, region, ACORN category, media usage, commercial TV viewing and source of regular grocery shopping, May 2006
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- Figure 44: Purchasing behaviour, by lifestage, Mintel’s Special Groups, region, ACORN category, media usage, commercial TV viewing and source of regular grocery shopping, May 2006
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- Figure 45: The Internet and price comparison, by lifestage, Mintel’s Special Groups, region, ACORN category, media usage, commercial TV viewing and source of regular grocery shopping, May 2006
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- Figure 46: Price and range/specification factors determing source of car purchase, by lifestage, Mintel’s Special Groups, region, ACORN category, media usage, commercial TV viewing and source of regular grocery shopping, May 2006
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- Figure 47: Dealer-related factors determining source of car purchase, by lifestage, Mintel’s Special Groups, region, ACORN category, media usage, commercial TV viewing and source of regular grocery shopping, May 2006
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- Figure 48: Price-related consumer attitudes towards car purchasing, by lifestage, Mintel’s Special Groups, region, ACORN category, media usage, commercial TV viewing and source of regular grocery shopping, May 2006
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- Figure 49: Consumer attitudes towards multi-franchising, by lifestage, Mintel’s Special Groups, region, ACORN category, media usage, commercial TV viewing and source of regular grocery shopping, May 2006
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- Figure 50: Consumer attitudes towards car servicing, by lifestage, Mintel’s Special Groups, region, ACORN category, media usage, commercial TV viewing and source of regular grocery shopping, May 2006
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Retail Market Shares
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- Figure 51: Top ten UK franchised car dealers, by turnover, number of outlets and market share, 2005
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Retailer Profiles
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- Pendragon plc
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- Figure 52: Pendragon Plc, financial performance, 2001-05
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- Figure 53: Pendragon UK, sales and operating performance, 2001-05
- Reg Vardy plc
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- Figure 54: Reg Vardy Plc, financial performance, 2001-05
- Arnold Clark Ltd
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- Figure 55: Arnold Clark Ltd, financial performance, 2001-05
- Sytner Group Ltd
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- Figure 56: Sytner Group Limited, financial performance, 2003 and 2004
- Inchcape Retail Ltd
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- Figure 57: Inchcape UK*, financial performance, 2001-05
- Lookers plc
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- Figure 58: Lookers Plc, financial performance, 2001-05
- Camden Motor Group Ltd
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- Figure 59: Camden Motor Group Ltd, financial performance, 2001-05
- Jardine Motor Group plc
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- Figure 60: Jardine Motors Group Plc, financial performance, 2004-05
- European Motor Holdings plc
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- Figure 61: European Motor Holdings plc, financial performance, 2002-06
- Bristol Street Motors
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- Figure 62: Bristol Street Group Ltd, financial performance, 2000-04
- HR Owen plc
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- Figure 63: HR Owen Plc, financial performance, 2001-05
- Ryland Group Ltd
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- Figure 64: Ryland Group Ltd, financial performance, 2001-05
- Marshall Motor Group Ltd
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- Figure 65: Marshall Motor group Ltd, financial performance, 2001-05
- Dixon Motor Group Ltd
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- Figure 66: Dixon Motor Group Ltd, financial performance, 2001-05
- Factory-owned dealer groups
- DaimlerChrysler Retail Ltd
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- Figure 67: DaimlerChrysler Retail Limited, financial performance, 2001-04
- Ford Retail Group Ltd
- Reagroup UK (Renault Retail Group)
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- Figure 68: Renault Retail Group Ltd*, financial performance, 2003 and 2004
- Robins & Day
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- Figure 69: Robins & Day Ltd, financial performance, 2003-04
- Car supermarket operators
- Carcraft
- CarLand
- Motorpoint
- Carshock
- Online/phone retailers
The Future
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- Oil price rises will heighten motoring costs
- Economic pressure will continue to weaken demand
- But cars remain integral to modern lifestyles
- Cars also an emotional support
- Showrooms standards may need to be relaxed
- Multi-brand sites more likely than multi-franchised dealerships
- Further consolidation expected at the top
- Fewer but larger outlets likely
- Dealer margins remain under pressure
- Servicing landscape little changed
- More regulation likely in servicing
Forecast
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- Figure 70: Forecast of car sales, by value, 2006-11
- Factors incorporated in the forecast
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