The Multiplier Essay

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Car Retailing
Executive Summary – UK – July 2012

Car Retailing
Executive Summary – UK – July 2012

Neil Mason
Head of Retail Research

Car retailing has suffered badly from the effects of the recent economic recession.
Although there was evidence of a recovery taking place, this appears to have been halted during 2011 as the economy and consumer confidence took a dip. As such, the market is set for a period of continuing turbulence placing ever greater pressures on retailers and car manufacturers.

1

Car Retailing
Executive Summary – UK – July 2012

The Market
Figure 1: New car sales, 2007-17

Source: Mintel

Figure 2: Used car sales, 2007-17

Source: Mintel

2

Car Retailing
Executive Summary – UK – July 2012

Retailers hit by sluggish UK economy

However, despite the best efforts of a number of companies, the direct sale of cars to the consumer has failed to take off as yet being limited to date to used cars. The market for car sales, and new car sales in particular, has been badly affected in recent years by the slowdown in the UK economy. The result has been sluggish new car volumes with the used car sector benefiting most.

Indeed, Mintel’s research suggests that dealers are currently focusing their activities on the listing of vehicles or on improving the way that they interact with potential customers through the use of social media. Data released for 2011 put new car sales at 1.94 million units. This is below those achieved in 2010 and down on the recent low of 1.99 million units in 2009 at the height of the recession.

Small and medium-sized vehicles dominate

The used car market has benefited most from the woes of the sector with sales up at 6.8 million units in
2011 as compared to 6.3 million units in 2009.

Figure 3: Share of new vehicle sales, by vehicle type,
2011
36%

Market Factors

25%

Failure of UK economy to grow a major concern
13%

By far the biggest issue facing those in the car market is the current performance of the UK economy, and in particular its failure to fully recover from recession.

9%
6%

2%

Although there was evidence in 2010 that this was the case, 2011 failed to see any significant improvement in
GDP growth with this culminating in a double-dip recession by Q1 2012.

1%

6%

2%

Source: SMMT/Mintel
Analysis of new car sales illustrates the current importance of smaller and medium-sized vehicles with cars in the supermini, lower medium and upper medium categories accounting for around three quarters of sales in 2011.

Consumer confidence has been badly affected by such events whilst the ever increasing costs of motoring, most obviously demonstrated by rising fuel costs, have only made the situation worse in the eyes of many buyers. Yet there is evidence that buyers are purchasing other specific vehicle formats with the smaller category of vehicle sold, the mini format, seeing sales nearly double between 2007 and 2011.

Internet fails to provide any quick fix
A long-term development for retailers has been the use of the internet either indirectly for the promotion of vehicles or more recently by some for the sale of cars direct to the consumer.

There is also recent evidence since 2010 that an increasing number of buyers are looking at other vehicle styles. In particular, the executive and 4x4 SUV categories have seen especially strong demand.

3

Car Retailing
Executive Summary – UK – July 2012

Dealers focus on bigger sites

Companies, Brands and
Innovation

Figure 5: Number of franchised dealership outlets,
2000-11

Mass-market brands in decline
Citroen

Figure 4: Percentage point change in manufacturer market share, 2009-11

Toyota
Mercedes-Benz
Peugeot
Nissan

Citroen

Audi

Toyota

BMW

Mercedes-Benz

Volkswagen

Peugeot

Vauxhall

Nissan

Ford

Audi
-2.5

BMW

-2.0

-1.5

-1.0

-0.5

0.0
Show More

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