Car Retailing - UK - August 2008

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
  • igure 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