EXECUTIVE

SUMMARY
CAR PURCHASING PROCESS
UK, APRIL 2017
CAR PURCHASING PROCESS, UK - APRIL 2017 2

CAR SALES REACHED AN ALL-TIME HIGH OF 10.54 MILLION UNITS IN 2016. WHILE THIS IS GOOD NEWS FOR THOSE
INVOLVED IN THIS SECTOR, AND A REFLECTION OF THE EFFORTS TO STIMULATE NEW CAR SALES IN RECENT
YEARS, THERE ARE MANY REASONS TO BE CONCERNED ABOUT THE NEXT FEW YEARS. NUMEROUS FACTORS
APPEAR SET TO IMPACT ON DEMAND RESULTING IN EVERMORE CREATIVE APPROACHES BEING REQUIRED IN
ORDER TO CONTINUE TO ENCOURAGE PURCHASING.

Neil Mason, Head of Retail Research

The market FIGURE 1: UK NEW AND USED CAR SALES, BY VOLUME, 2011-21

Car purchases surpass 10.5

million units in 2016

The UK car market has performed strongly

in recent years. Sales of both new and
used vehicles have both been on an
upward track with purchases reaching
10.54 million units in 2016 or 22% ahead
of their level in 2011 and a new record.

Looking beyond 2016, Mintel expects more

modest prospects for growth. New cars
sales in particular are likely to stagnate
in 2017 and then fall back slightly. The
used car sector, however, boosted by a
flow of pre-owned cars, is set to continue
to expand thereby ensuring total volumes
are maintained. The result is that Mintel Source: Mintel
forecasts total sales at 9.97 million units by
2021, which is 15% up on 2011.
FIGURE 2: NEW AND USED CAR MARKET VOLUMES, 2011-16
Used car sales dominate the
market

Purchase data for 2015 puts combined

new and used car volumes at 10.03 million
units with forecasts for 2016 placing
volumes up at 10.54 million units to put the
market 22% ahead of that in 2011.

Although smaller in terms of annual

purchases, the new car market has been
the more buoyant since 2011. Volumes
expanded by 37% between 2011 and 2016
to stand at 2.69 million units.

The used car market, although not as

buoyant as new cars, has also been
strong, rising 17% between 2011 and 2016
to 7.85 million units. In terms of the overall
market, used cars are by far the most
important sector, accounting for nearly Source: 2011-16 SMMT (new cars), 2011-14 TNS-BMRB (BCA Used Car Market Report 2015) (used cars)/Mintel
three quarters (74.4%) of sales in 2016.

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CAR PURCHASING PROCESS, UK - APRIL 2017 3

Recent popularity of diesel FIGURE 3: SALES OF CARS, BY FUEL TYPE, 2011-16

appears to have peaked

While the new car market can be broadly

split between petrol and diesel powered
vehicles, a recent trend has been a
decline in the popularity of diesel based
on new car sales. This appears to be
benefiting petrol as well as cars powered
by other fuels, or AFVs (Alternative Fuelled
Vehicles).

The period since 2015 has been one of

changing fortunes for diesel. Its share
of new car sales has fallen back from
50.1% in 2014 to 47.7% in 2016 as factors
such as its role in urban pollution and the
recent diesel emission testing scandal
have tarnished its image amongst some.
In contrast, petrol has begun to re-assert
its prominence as the most popular
hydrocarbon fuel with 49.0% of sales in
2016. Vehicles using hybrid or other fuels Source: SMMT/Mintel
have made most progress, however,
raising their share of new car sales from
1.3% in 2011 to 3.3% in 2016. FIGURE 4: CHANGE IN SHARE OF NEW AND USED CAR VOLUMES, BY
CHANNEL, 2013-16
Dealers are growing their share of
the overall market

Analysis of sales of new and used cars

shows both the importance and growing
prominence of franchised dealers. They
accounted for 47.0% of sales in 2016 with
their share up 1.8 percentage pointing to
the dominance of the buoyant new car
market.

Private sellers suffered a 1.9 percentage-

point fall over the same period to account
for 27.2% of sales in 2016 with the impact
of growth in the new car market and
consequent part exchange deals reducing
their profile. Franchised dealers, with
21.6% in 2016, saw their share increase
by 0.1 percentage point compared with
2011. * includes online and brokers
Source: SMMT/BCA/Mintel estimates

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CAR PURCHASING PROCESS, UK - APRIL 2017
Companies and brands
Mixed fortunes for car
manufacturers
Many of the leading car manufacturers
have suffered from mixed fortunes in
recent years. Long-time leaders Ford and
Vauxhall have seen their share of the
market decline although in the wake of
dieselgate, third-placed manufacturer,
Volkswagen, has also suffered a fall in its
share of sales. It held a reduced 7.7% of
the new car market in 2016, while Ford
took 11.8% and Vauxhall 9.3%.
In contrast, premium brands continue to
grow their share of sales, with BMW, Audi
and Mercedes-Benz recording especially
strong growth. They took fourth, fifth and
sixth placings and a combined 19.7% of
sales in 2016, with this up on 14.0% on
2010.
Manufacturers and distributors
invest in online as a sales channel
Innovations continue to take place within
the automotive market with much recent
attention focused towards the use of the
internet as a sales channel. Although to date
the internet has failed to develop as a mass
market channel for car purchasing, there is
evidence that manufacturers and others with
an interest in the market believe its role in
purchasing may be about to change.
Car manufacturers such as Hyundai,
Peugeot, Citron and Smart have all
opened dedicated websites since early
2017 whereby consumers can choose
and buy cars. Equally those with an
interest in helping buyers are also showing
renewed interest in buying online, such
as Exchange & Mart which has made
improvements to its website.
Advertising expenditure expands
Above-the-line, online display and direct
mail total advertising expenditure by
UK car dealers has increased overall
between 2012 and 2016, mirroring the
rise in car sales. At 115.9 million in 2016
expenditure is up 36.4% on 2012, although
only 0.8% up on 2015. Although there
are a large number of car dealers that
advertise it is one company, webuyanycar.
com, which is the clear leader. It spent
14.04 million in 2016, accounting for
12.1% of all expenditure.
A long-term trend with regards to
expenditure is a shift away from traditional
channels such as direct mail and press
advertising to newer media such as
television and digital. Digital has made the
greatest strides between 2012 and 2016
to move from fifth place to third place.
Television, traditionally an expensive
channel, has similarly made progress to
account for a third of expenditure in 2016
and is illustrative of the current confidence
of advertisers in the car market.
The consumer
Car owners are in the majority
Car ownership is high, with Mintels
research placing ownership at 71% of
the adult population. Comparing current
car ownership with the period 2015
to 2017, there has been an increase
of 7 percentage points. Such a rise in
ownership mirrors the increase in the sale
of cars over this same period and suggests
a direct link between growing car sales
and the spread in car ownership.
Nearly half of all cars were
purchased in the last two years
Mintels research records that a sizeable
percentage (47%) were acquired in the
FIGURE 5: INTENTION TO PURCHASE A CAR IN THE NEXT 3 YEARS,
FEBRUARY 2017
Do you or someone else in your household plan to buy a car(s) within the next
3 years?
Base: 1,973 internet users aged 17+
Source: Lightspeed/Mintel
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4
last two years. Currently a fifth of owners
bought new in the last two years while
23% bought second-hand during this
period. Overall, most cars in ownership
(57%) were purchased more than two
years ago.
When comparing current data to that for
the period 2015 to 2017, a 2 percentage-
point increase is evident for those who
have purchased a new car less within the
last two years. In contrast, a 2 percentage-
point decrease is recorded for those who
have purchased a second-hand car more
than two years ago is recorded.
More than half of adults plan to
buy a car in the next three years
Over half (53%) of adults say that they,
or someone else in their household, will
definitely or probably buy a car in the
next three years with 26% saying they
will definitely purchase a vehicle. When
comparing Mintels latest research with
that conducted since 2015, while there has
been an overall increase of 5 percentage
points in those who are definitely
purchasing, there has been no change
between 2016 and 2017. This hints at a
recent weakening in the market and is
likely to signal a slowdown for future car
sales.
CAR PURCHASING PROCESS, UK - APRIL 2017 5

Less than half of those planning FIGURE 6: STRONGEST INTENTIONS TO PURCHASE A CAR IN THE NEXT 3
to purchase expect to do so in the YEARS, FEBRUARY 2017
coming 12 months
Approximately when do you think you will be looking to make this purchase? If
Providing further evidence that car you/your household plan on buying more than one car please answer for the car
purchasing may be beginning to slow you plan to purchase first.
down is the fact that less than half (46%)
who expect (definitely or probably) to buy
in the coming three years plan to buy in
the coming 12 months. Instead, 48% say
they plan to purchase over the coming two
or three years.

New cars are preferred over used

A large percentage (48%) of those who

expect to buy in the coming three years
plan to purchase a new vehicle. This
compares with 37% who expect to buy
second-hand and 15% who are undecided.
Looking at the preferences towards new
and used between 2015 and 2017, Mintels
research records a 9 percentage-point
increase in planned new car purchases Base: 1,062 internet users aged 17+, or household members, who definitely or probably plan to buy a car in the
(48% v 37%). next 3 years
Source: Lightspeed/Mintel

FIGURE 7: LIKELIHOOD OF NEW OR USED PURCHASE, FEBRUARY 2017

Do you plan to buy the car new or second hand/used? If you/your household
plans on buying more than one car please answer for the car you plan to
purchase first.

Base: 1,062 internet users aged 17+, or household members, who definitely or probably plan to buy a car in the
next 3 years
Source: Lightspeed/Mintel

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CAR PURCHASING PROCESS, UK - APRIL 2017 6

Savings and part exchange are the FIGURE 8: METHODS OF PAYMENT FOR NEXT CAR, FEBRUARY 2017
most popular methods of paying
for a car Thinking only about your next car purchase, which method(s) would you use to
pay for it?
Although there are various methods
for consumers to pay for their next car,
savings or using the capital with an
existing vehicle through a part exchange
are by far the most important. Nearly six
out of 10 (59%) of those planning to buy
a car in the coming three years would use
savings, while 37% would part exchange
an old car. When it comes to obtaining
finance, the most popular options are HP
(13%) and PCP agreements (10%).

A minority of buyers are

interested in buying online

There is a sizeable minority of those

who are planning to buy in the coming
three years that are also interested in
purchasing online. Mintels research notes
11% who say they are very likely while an
additional 20% say they are somewhat
likely to do so. In terms of groups, young
adults and those on the highest incomes
appear the most interested in using this
channel. Yet, illustrating the progress Base: 1,062 internet users aged 17+, or household members, who definitely or probably plan to buy a car in the
that is required to make the internet a next 3 years
mainstream channel for buyers, there are Source: Lightspeed/Mintel
still 42% who are not at all likely or not
very likely to us it.
FIGURE 9: LIKELIHOOD OF BUYING NEXT CAR ONLINE, FEBRUARY 2017

How likely would you be to purchase your next car online?

Base: 1,062 internet users aged 17+, or household members, who definitely or probably plan to buy a car in the
next 3 years
Source: Lightspeed/Mintel

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CAR PURCHASING PROCESS, UK - APRIL 2017 7

Independent and dealer websites FIGURE 10: PREFERRED INTERNET, FEBRUARY 2017
dominate for online purchasing
And which of the following internet channels would you most prefer to use
Over a third (36%) of those who are very when purchasing your next vehicle?
likely or likely to buy online in the coming
three years would go to an independent
website while a further 33% would use a
manufacturer website. Auction websites
record a further 23% of interest, with this
likely to reflect their current prominence
as a notable channel for online car
purchasing.

Petrol leads as the preferred fuel

for future car purchasers

Petrol is currently the preferred fuel for

future car buyers, with 69% saying they
would be interested in choosing it. This
compares to only 36% who would look to Base: 324 internet users aged 17+, or household members, who definitely or probably plan to buy a car in the next
buy a vehicle powered by diesel. The other 3 years and very likely or somewhat likely to buy online
power source of note is hybrid technology, Source: Lightspeed/Mintel
whereby an electric motor is combined
with a petrol or diesel engine, which is of
interest to 30% of buyers. FIGURE 11: PREFERENCE FOR FUTURE FUEL TYPES, FEBRUARY 2017

Diesel emission testing scandal Imagine that you were buying a new car for everyday use. Which of the
records high awareness following fuel types would you be interested in having?

The recent publicity given to the diesel

emission testing scandal, which has
affected manufacturers such as VAG
(Volkswagen Audi Group), appears to
have resulted in a high level of awareness
amongst many adults. Mintels research
shows two thirds (65%) are aware of it,
compared to 28% who arent.

Base: 1,062 internet users aged 17+, or household members, who definitely or probably plan to buy a car in the
next 3 years
Source: Lightspeed/Mintel

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CAR PURCHASING PROCESS, UK - APRIL 2017
What we think
The UK car market has experienced
tremendous growth in recent years with
combined new and used sales reaching
a new high in 2016. Car buyers have
been encouraged to purchase through
a combination of initiatives which have
benefited the new car sector in particular.
Yet set against this positive background,
Mintel believes that the short- to medium-
term outlook for the market is one of
uncertainty with sales set to stagnate and
overall fall back.
Although much of the expected slowdown
for the market is likely to be explained
by the uncertainty around Brexit, it is
likely that other factors will also come
into play. In particular, there is the fact
that the car sector, and especially new
car sales, operates on cycles, with sales
subject to natural fluctuations. Other
likely impacts include rising costs of
motoring, especially those associated
with insurance, as well as the likely
restrictions on certain vehicles, such as
diesels, being permitted to operate in
urban areas in the long term.
Despite what is expected to be a difficult
period for volume sales, the car market
is likely to continue to remain a dynamic
sector when it comes to demands
from purchasers. These have already
seen changes to the market when it
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8
comes to preferred vehicle formats and
manufacturers, with both of these set to
continue. Developments in areas such
as fuel are already expected to see a
diminution in the profile for diesel while
the role of the technology, both within
and outside of cars, continues to evolve.
The role of the internet in particular is set
to strengthen as consumers increasingly
become accustomed to purchasing
an ever-wider range of products and
services online. Although any mass
movement of buyers online is still some
way off, the internet is expected to
impact more on purchasing and change
the role of dealers and other traditional
sales channels.
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