Auto Market Trends in the UK
From shifting to eco-friendly cars to an increase in new car registrations, 2015 was marked by events that underlie the significant changes taking place in the automotive industry in the UK.
Though the UK automotive industry saw a down slide during the economic recession, it has made a strong recovery. Not only were 1.5 million cars produced in the UK in 2013, the production of new cars is expected to rise to over two million in 2017, surpassing the previous industry record of 1972.
The year 2015, was a record breaking year for the UK auto market with March recording the highest new car registrations, closely aligned with the positive growth in the UK consumer confidence index.
As we look ahead in 2016, our vertical experts and analysts point out 5 key trends that will gain traction this year and impact customer experiences in the future.
The Shift to Eco-friendly Cars
There has been a remarkable surge in the demand for eco-friendly cars in the UK, with over 50% consumers moving from ‘style to eco-conscious’ automobiles. The shift to more efficient diesel and petrol engines has been critical to this success, while significant increase (139%) in electric and plug-in car sales has also contributed to this boost.
The UK saw an increase of more than 60% in sales of electric and hybrid vehicles in the second quarter of 2015 when compared to the same period last year. Even Alternate Fuel Vehicle registrations rose by 17.4% across Europe and the demand for AFVs in the UK surged by 62.4%.
With the average new car CO2 emissions dipping to 124.6 g/KM beating the European Union’s target by 4.2%, the year has been particularly strong for alternatively fuelled vehicles as the preferred choice.
With the shift in mindset of people from stylish cars to eco-friendly cars, advertisers should focus on highlighting the environment friendly features of the car along with other utilities.
Boost in Consumer Confidence Index
There has been an increase in the average Consumer Confidence Index by 5.6 points from 2014 to 2015. This rise has been one of the primary reasons for the jump in vehicle registrations to 2.63 million.
Also with the wage growth set to increase by 2.4%, disposable income is set to boom in the UK in the next five years, predicting a boost in car sales.
Changes in the Used Car market
With an estimated 7.14 million cars being sold in 2015, the used car market in the UK is the largest in Europe. But with the wealth of data available online, car shoppers today are increasingly searching online before making a decision on their purchase.
The drop in new car registrations during the recession period of 2008-09, and increased car holding capacity of owners from 6.8 years in 2007 to eight years in 2015 has brought about a scarcity in the usage of cars older than nine years old. This has resulted in the decrease in average price of older used cars, and rise in prices for the under-supplied segment of middle age cars.
But with new car registrations set to improve, and buyers preferring new cars more due to attractive monthly rates, the used car market will have to adopt new models or channels of selling.
- With the used car market shifting from the traditional form of business to online business models, campaigns should be targeted towards creating awareness for selling and buying used cars online.
- With used cars seeing tough competition from new car registrations, auto marketers should build campaigns around their value proposition.
Increase in New Car Registrations
Though the Consumer Price Index for new cars has been constantly increasing since 2013, this has not affected new car registrations. The total volume of new car registrations is predicted to increase by a further three percent by the end of 2016 as compared to 2015. Also increase in wage growth and purchasing power of consumers has contributed to rise in new car registrations.
With the UK consumer spending having grown to 2.5% per annum faster than inflation over the past three years, and factors like increasing job opportunities, stable economy and attractive interest rates have led to car shoppers preferring a new car over a used car (less than three years old).
Boom in Fleet sector
Fleet demand in the UK rose by 11.8% to reach an all-time high of 1.3 million units. The sector also saw a boost in December, with fleet registrations seeing a rise by 13.8%. Many vendors have shunned the practice of holding back stock till the year end in the anticipation of achieving higher values in the New Year. The general market view is that there will be a greater volume of wholesale stock in 2016, and the best practice would be to sell cars up to the end of the year. This will give car shoppers greater scope to choose from a larger pool of vehicles.
With the UK auto industry expected to continue to perform well, it will result in improvement in both wholesale and consumer activity.
With the UK fleet industry booming as well as marking a change in the purchasing behaviour of car shoppers, auto marketers should build campaigns that focus on the fleet market.
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