Table of Contents
Overview
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- What you need to know
- Products covered in this Report
Executive Summary
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- The market
- Market value set to increase further
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- Figure 1: Best- and worst-case forecasts of vehicle recovery market, by value, 2013-23
- Traditional, comprehensive, policies are the most popular
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- Figure 2: Segmentation of the vehicle recovery market (value), by policy type, 2017
- Free or reduced-price insurance is the most popular
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- Figure 3: Key channels used for purchasing breakdown recovery insurance, 2012, 2014, 2016 & 2018
- Companies and brands
- Big three companies coming under increased pressure
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- Figure 4: Company shares of the vehicle recovery market, by UK membership, 2012 and 2018
- AA has the most positive brand characteristics
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- Figure 5: Attitudes towards and usage of selected brands, June 2018
- Increased expenditure from the AA boosts promotional investment
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- Figure 6: Total above-the-line, online display and direct mail advertising expenditure on breakdown recovery, 2013-17
- The consumer
- The AA is the most popular with vehicle owners
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- Figure 7: Ownership of breakdown cover, by recovery organisation, July 2018
- Price is key when selecting a company
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- Figure 8: Factors considered when selecting a provider of breakdown cover, July 2018
- Buying online leads as the main way to acquire cover
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- Figure 9: Key means by which current breakdown cover for your main vehicle was acquired, July 2018
- Loyalty is important
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- Figure 10: Action taken last time renewed breakdown recovery, July 2018
- Two thirds are likely to renew with their existing provider
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- Figure 11: Likelihood of renewing with your existing provider, July 2018
- Traditional insurance policies dominate
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- Figure 12: Interest in different types of vehicle recovery insurance policy, July 2018
- Financial discounts dominate
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- Figure 13: Factors considered when selecting a provider of breakdown cover, July 2018
- What we think
Issues and Insights
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- Does slowdown in revenue growth signal difficult times ahead?
- The implications
- Comprehensive policies are back in fashion
- The facts
- The implications
- Consolidation outside of the big three is increasingly evident
- The facts
- The implications
The Market – What You Need to Know
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- Market value set to increase although real growth will stagnate
- Membership and traditional policies dominate
- Direct sale and free or reduced price policies are most popular
- IPT reaches 12%
Market Size and Forecast
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- Revenues continue to climb although growth slows
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- Figure 14: Best- and worst-case forecasts of vehicle recovery market, by value, 2013-23
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- Figure 15: UK vehicle recovery market, by value, at current and constant prices, 2013-23
- Forecast methodology
Market Segmentation
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- Regular membership market continues to expand
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- Figure 16: Segmentation of the vehicle recovery market, by value, at current prices, 2013-18
- Average premiums rise as major players refocus on adding value
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- Figure 17: Average premium paid, 2013-18
- Policies with restrictions account for a sizeable share of the market
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- Figure 18: Segmentation of the vehicle recovery market (value), by policy type, 2017
- Most policies are sold direct
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- Figure 19: Segmentation of the vehicle recovery market (value), by direct/indirect channels, 2017
Channels to Market
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- Over half of recovery insurance is acquired free or at a reduced price
- Mixed fortunes for other channels
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- Figure 20: Key channels used for purchasing breakdown recovery insurance, 2012, 2014, 2016 & 2018
Market Drivers
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- Nearly a quarter of cars are 12 years or older
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- Figure 21: Age structure of the UK car parc in years, 2013, 2015 and 2017
- Car sales move into reverse…
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- Figure 22: New and used car market volumes, 2013-18
- …with rising costs of ownership evident since 2015
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- Figure 23: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2013-17
- Yet more consumers still plan to buy in the next three years
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- Figure 24: Do you or someone else in your household plan to buy a car(s) within the next 3 years, December 2017
- Second car ownership is increasing once again
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- Figure 25: Percentage of households with car availability, in England, 2007-17
- Falling prices for second-hand cars increasingly make them affordable
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- Figure 26: Price indices of new and used cars, 2007-17
- Rising fuel prices are a growing issue
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- Figure 27: Average monthly retail prices of petroleum products and a crude oil price index, at current prices, January 2012-June 2018
- Stabilisation in IPT at 12% is helpful for policies
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- Figure 28: Insurance premium tax rates, 1997-2017
- Trips taken each year are down if walking is excluded
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- Figure 29: Trips, distance travelled and time taken, England, 2007-17
- A growing, and ageing, population should present opportunities
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- Figure 30: Trends in the age structure of the UK population, 2012-22
Companies and Brands – What You Need to Know
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- AA performing the best of the larger service providers
- Consolidation evident amongst others in the market
- Service packages are a major differentiation strategy
- Increased expenditure from the AA helps to boost advertising and promotional investment
- AA has the most positive brand characteristics of the big three
Market Share
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- Three biggest names all suffer a fall in membership
- Membership nears 30 million
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- Figure 31: Company shares of the vehicle recovery market, by UK membership, 2012-18
- Consolidation evident amongst others in the market
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- Figure 32: Share of others in the market, by UK membership, 2016 and 2018
Competitive Strategies
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- Service options are a key competitive differentiator
- Matrix pricing becomes the norm
- Ways of keeping premiums down
- Roadside assistance is a key competitive battleground
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- Figure 33: Review of roadside assistance prices and packages, July 2018
- Different methods of payment
- Promotions popular with big three
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- Figure 34: Key short term offers from vehicle recovery companies, July 2018
- Use of partnerships to extend market coverage
- Retailers
- Financial institutions
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- Figure 35: Packaged current accounts that offer breakdown cover, July 2018
- Vehicle manufacturers
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- Figure 36: Selected car manufacturer-branded breakdown cover on new purchases, July 2018
Advertising and Marketing Activity
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- Advertising grows in 2017 on the back of investment by the AA
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- Figure 37: Total above-the-line, online display and direct mail advertising expenditure on breakdown recovery, 2013-17
- Majority of expenditure occurs during the summer months
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- Figure 38: Recorded above-the-line, online display and direct mail total advertising expenditure on breakdown recovery, by month, 2016 and 2017
- Singing baby helps raise AA’s share of spend
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- Figure 39: Recorded above-the-line, online display and direct mail total advertising expenditure on breakdown recovery, by advertiser, 2013-17
- Television and direct mail continue to dominate as key channels
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- Figure 40: Recorded above-the-line, online display and direct mail total advertising expenditure on breakdown recovery, by media type, 2013-17
- Nielsen Ad Intel coverage
Brand Research
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- AA has the strongest differentiation and trust from consumers
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- Figure 41: Attitudes towards and usage of selected brands, June 2018
- Key brand metrics
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- Figure 42: Key metrics for selected brands, June 2018
- Brand attitudes: personality, trust and value typify attitudes towards main brands
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- Figure 43: Attitudes, by brand, June 2018
- Brand personality: Each of the big three players has contrasting features
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- Figure 44: Brand personality – Macro image, June 2018
- AA is viewed as prestigious and desirable whilst Green Flag is affordable
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- Figure 45: Brand personality – Micro image, June 2018
The Consumer – What You Need to Know
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- The AA leads overall
- Competitive pricing is the most important factor sought
- Online is the most popular channel for acquiring insurance
- Nearly half (46%) of policy holders shop around when renewing
- New styles of insurance fail to dent dominance of traditional policies
- Ways of reducing cost are popular as innovations
Presence of Breakdown Recovery Organisations
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- AA dominates the market
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- Figure 46: Ownership of breakdown cover, by recovery organisation, July 2018
- AA has greatest affinity with young adults
- AA is also prominent with wealthier adults and those in cities
- Links with dealers helps boost the profile of the AA and RAC
- Interest in the AA continues despite the challenge from smaller providers
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- Figure 47: Ownership of breakdown cover, by recovery organisation, 2013-18
Selecting a Breakdown Recovery Provider
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- Price is key when selecting a company
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- Figure 48: Factors considered when selecting a provider of breakdown cover, July 2018
- Young and old look for different features
- Wealthy are more interested in non-price factors
- Oldest adults want stability
- Used car owners look for price benefits
- Green Flag members less bothered about brand and image
How Cover is Acquired
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- Buying online leads as the main way to acquire cover
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- Figure 49: Key means by which current breakdown cover for your main vehicle was acquired, July 2018
- Purchasing with car insurance popular with younger adults
- Older adults retain interest in traditional purchase methods
- New car buyers are more likely to have free cover from their dealer
- Green Flag records success in the use of online for purchasing
Choosing a Breakdown Recovery Provider
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- Loyalty is an important feature of the market
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- Figure 50: Action taken last time renewed breakdown recovery, July 2018
- Middle-aged adults and city dwellers want to check out the market
- Older adults are amongst the most loyal
- Green Flag has success in attracting those who shop around at time of renewal
- Two thirds are likely to renew with their existing provider
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- Figure 51: Likelihood of renewing with your existing provider, July 2018
- Over half of those aged 65+ are likely to renew…
- …while middle-aged adults appear more uncertain
- Less affluent also record a high degree of loyalty…
- …as do owners of new cars
- Loyalty breeds loyalty
Interest in Different Types of Policy
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- Traditional insurance policies dominate
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- Figure 52: Interest in different types of vehicle recovery insurance policy, July 2018
- Young and old want different types of traditional policy
- Older adults – An opportunity?
- Policies with restrictions popular with city dwellers
- Traditional insurance without restrictions are popular with those purchasing vehicle insurance
- Shopping around encourages interest in policies with restrictions
- Traditional insurance back in fashion?
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- Figure 53: Interest in different types of vehicle recovery insurance policy, 2017and 2018
Attitudes towards Breakdown Recovery Insurance
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- Financial discounts lead over other factors
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- Figure 54: Factors considered when selecting a provider of breakdown cover, July 2018
- Young adults are more likely to be interested in new services
- Discounts popular with older women
- Those looking at alternative policy styles focus in on specific features
Attitudes towards Vehicle Recovery Insurance – CHAID Analysis
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- Methodology
- Used car owners and those with children are a target group for discounts
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- Figure 55: Vehicle recovery interest – CHAID – Tree output, July 2018
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- Figure 56: Vehicle recovery interest – CHAID – Table output, July 2018
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Data Sources
- Market sizing and segment performance
- Forecast Methodology
- Forecast Data
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- Figure 57: Forecast of UK vehicle recovery market (value) – best- and worst-case scenarios, 2018-23
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