The Used Car Market Report 2014 A REPORT FOR BCA

Centre for Automotive Management The University of Buckingham Business School www.buckingham.ac.uk/cam

The Used Car Market a report by BCA 2

Foreword

We are delighted to bring

you this 24th edition of

the BCA Used Car Market

Report.

This year's report looks

at how the countrys

improving economic

prospects have

influenced motorists'

decisions on buying a

used car and the likely

impact of rising new car volumes on the used car market.

Our editor, Emeritus Professor Peter N C Cooke, the Centre for Automotive

Management at The University of Buckingham is a highly-regarded

commentator on the motor industry.

Professor Cooke spent over 20 years in the motor industry and has taught,

researched and written about the sector at business schools for a similar

period. He has undertaken much work on the fleet, used car and LCV sectors

and has edited the BCA Used Car Market Report for several years.

The Buckingham Automotive team has sought to retain the key elements of

this highly-respected report, and has also carried out new analysis on the

changing shape of the used car market.

Given the strong likelihood of a sustained economic recovery, the BCA Used

Car Market Report 2014 also looks at the opportunities for growth in the UK's

new and used vehicle markets.

Jon Olsen

CEO

BCA

Contents Foreword

Introduction

Overview 6

New and used car sales recovery continues The new car market The used car market Consumer perspective

UK Market Review 11

Used car volumes rise for fifth year Used:new car ratios Used car market segments Dealers used car volumes Private sector used car sales UK car market value reaches new high 15 Dealer/private sector used car market value Used car selling prices Used car prices at auction Average age of cars continues to rise 18 Seventy-nine per cent of cars reach 12 years The parc turn ratio A more promising outlook? 20

Consumer Perspective 22

Part One What Used Car to Buy? 23 What used car to consider buying? Factors driving search for used car 'Crunch factors' Part Two Where to Buy From? 26 Which used car retailer to deal with? Buying from franchised and non-franchised dealers Three-quarters of motorists buy a used car Car ownership slips in 2014 Hatchbacks market share drops Buying a used car rather than a new car? Sales of used diesels rise Part Three Car Owners' Options and Buying Intentions 32 Buying a car in the next 12 months? What type of car to buy next? Where to buy the next car? Low or 0% interest next time? Sell your car 'directly for cash'? Reasons for selling 'for cash' Part Four Economic Recovery, Running Costs, and Keeping in Touch 36 What car to buy during economic recovery? Effect of technology on motoring Alternatives to owning a car

Contents

Regional Review 39

'Personal experience' is the most powerful factor Crunch factors when deciding on a particular car Factors influencing choice of used car retailer When to buy the next car? Where to buy the next car? What type of car to buy next? Major influences on car search Selling your car 'for cash' Buying a new instead of a used car

European Overview 46

New car registrations Western European markets New member states Used car volumes Car parc Parc turn percentage Used:new volume ratios Used car sales per 1,000 inhabitants United Kingdom, Germany, Italy France, Spain

Recession, Recovery, Buyers and the Used Car Market 57

Economic change and recovery Income levels Automotive industry changes A Sting in the Tail? Some initial conclusions

Hard or Soft Landing for Used Car Values 66

New car registrations; historic and forecast A new replacement paradigm? Potential impact on used car market? Transitional or strategic change? Buyer have become more market savvy

Used LCVs and Economic Recovery 72

Rise in LCV Demand LCVS and the State of the Economy UK LCV Parc; Average Age LCVs at Auction LCV Finance Strategic Issues for Used LCV Retailers

BCA A Connected Marketplace 79

Statistical Data 81

Research 93

Introduction

The BCA Used Car Market Report 2014 aims to provide the same valuable insight

into the latest developments in the UK used car market that each of our previous

reports have done.

The UK Market Review is based on statistical information from national sources. This

is updated and compared with previous years data to provide an insight into volume

and value trends in the used car market.

The Consumer Perspective section of the report is based on a TNS-BMRB survey of

UK car owners. This comprises a review of the key issues that influence used car

buyers when deciding which car to buy and where to buy from.

This year, car owners were asked what expectations they have for buying their next

car if the economy continues to recover. They were also asked what alternatives they

might consider to owning a car outright, and how they thought technology might

affect motoring over the next five years.

The European section of the Used Car Market Report contains updated trend

information on Europes new and used car markets.

Other sections include 'A Hard or Soft Landing for Used Car Prices looking at the

likely impact of the fast-growing new car market and new car finance sector on used

car values, highlighting some caveats as the economy moves forward and the effect

of the Recession and Recovery on Used Car Buyers and the Used Car Market.

The report also looks briefly at the used LCV market and the main factors driving this

key automotive sector.

BCA is pleased to provide its Used Car Market Report 2014 to all those who have an

interest in the UK and European automotive industry.

The Used Car Market a report by BCA 6

Overview

New and used car sales recovery continues

Strong new car sales and higher used car volumes pushed combined UK car sales up

to the pre-recession level of 9.7 million in 2013.

Market volumes new vs. used; 2004 2013

Source: SMMT/TNS-BMRB

While new car sales staged a welcome recovery to 2.26 million units in 2013, they

remained some way short of the record levels seen in the early 2000s.

Falling sales across Europe saw the UK's share of Western Europe's new car market

climb a further 2.2% to 19.6% in 2013, consolidating its second place in the

European new car sales league outstripping third-placed France by 474,000 units.

Strong private sector sales and recovering fleet sector volumes saw UK new car

registrations rise 10.8% and 220,000 units to 2.26 million last year.

Used car volumes, which fell to 6.3 million units during recession, continued their

recovery rising to 7.4 million units in 2013, equalling 2006s figure.

2.6 2.4 2.3 2.4 2.1 2.0 2.0 1.9 2.02.3

6.87.3 7.4 7.1

6.76.3

6.6 6.77.1

7.4

9.49.7 9.7 9.5

8.88.3

8.6 8.69.1

9.7

1

2

3

4

5

6

7

8

9

10

11

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Milli

ons

New Used Total

Overview

The Used Car Market a report by BCA 7

The new car market

The new car market value climbed to a record high of 36.7 billion in 2013 as selling

prices increased and new car volumes reached a six-year high of 2.26 million.

Following several years over the 30 billion mark, UK new car market value fell

steeply to 28 billion in 2008, settling around that level before recovering strongly in

2012 and 2013.

New car market volume and value; 2004 2013

Source: SMMT//TNS-BMRB

UK new car registrations, which peaked close to the 2.6 million mark in 2003 and

2004, fell during recession and economic downturn to a low of 1.94 million units in

2011, with little recovery the following year.

The improving economy and attractive finance offers saw new car volumes rise

10.8% and 220,000 units to 2.26 million in 2013 as private sector sales climbed

15.6% over the previous year. New cars sales to the 25-plus fleet sector rose 5.7%

to 1.08 million, its share of the market dropping from 50.2% to 47.9% year on year.

As the UK economy shows clear signs of sustained recovery, new car volumes

continue to grow strongly up 10.6% to 1.29 million units for the first six months of

2014, the best half-year total since 2005.

The 2014 new car market has, so far, risen faster than the SMMT originally

anticipated and is expected to stabilise in the second half of the year. The SMMTs

latest forecasts see new car registrations rising 8.1% to 2.45 million in 2014 and by a

further 0.9% to 2.47 million units in 2015.

2.6 2.6

2.42.3

2.4

2.1

1.7 1.9

1.92.0

2.333.5

32.4 32.2 32.433.0

28.1

28.0

28.7 29.0

32.3

36.7

20

25

30

35

40

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

billionMilli

ons

Volume Value Scrappage deals

0.3

0.1

Overview

The Used Car Market a report by BCA 8

The used car market

UK used car volumes dropped from 7.4 million in 2006 to 6.3 million units three years

later, a