IBISWorld Industry Report G45.112 Used Car and - just … UK Auto...IBISWorld Industry Report...

2 About this Industry2 Industry Definition

2 Main Activities

2 Similar Industries

2 Additional Resources

3 Industry at a Glance

4 Industry Performance4 Executive Summary

4 Key External Drivers

5 Current Performance

8 Industry Outlook

10 Industry Life Cycle

12 Products & Markets12 Supply Chain

12 Products & Services

13 Major Markets

14 Globalisation & Trade

15 Business Locations

17 Competitive Landscape17 Market Share Concentration

17 Key Success Factors

17 Cost Structure Benchmarks

18 Barriers to Entry

19 Major Companies19 Pendragon plc

20 Penske Automotive Group

20 Arnold Clark Automobiles

21 Inchcape Retail

23 Operating Conditions23 Structural Risk Index

23 Investment Requirements

25 Key Statistics25 Industry Data

25 Annual Change

25 Key Ratios

26 Jargon & Glossary

IBISWorld Industry Report G45.112Used Car and Light Motor Vehicle Dealers in the UKMay 2010 Sarah-Jane Derby

Driving sales: The end of scrapping incentives helps the industry recover from the recession

www.ibisworld.co.uk | [email protected]

www.IbISwOrLD.CO.uK used Car and Light Motor Vehicle Dealers in the uK May 2010 2

Companies in this industry sell used cars and other light motor vehicles to final customers. Vehicles sold include passenger cars, SUVs, jeeps and any

other vehicles weighing less than 3.5 tons, including ambulances and minibuses. The sale of new vehicles is not included in this industry.

The primary activities of this industry are

Sale of used cars

Sale of used light motor vehicles

Industry Definition

Main Activities

Similar Industries

Additional resources

The major products and services in this industry are

Executive and all other vehicles

Four-wheel drives

Light commercial vehicles

Lower medium cars

Luxury and sports cars

Mini and supermini cars

Multi-purpose vehicles

Upper medium cars

About this Industry

G45.111 New Car and Light Motor Vehicle Dealers in the uKNew car dealers sell new cars and light motor vehicles to final consumers.

G45.190 Sale of Other Motor Vehicles in the uKSale of new and used heavy vehicles such are lorries is carried out by this industry.

For additional information on this industry

www.autoindustry.co.uk Auto Industry

www.ons.co.uk Office for National Statistics

www.smmt.co.uk Society of Motor Manufacturers and Traders


Market SharePendragon plc 8.4%

Arnold Clark Automobiles 6.7%

Penske Automotive Group 6.6%

Inchcape Retail 5.8%

Key External DriversConsumer confidence indexreal personal disposable incomeworld price of crude oilbusiness capital expenditure

Key Statistics Snapshot

Industry at a Glanceused Car and Light Motor Vehicle Dealers in 2010-11

revenue

£12.4bnProfit

£595.5mwages

£719.5mbusinesses

11,100

Annual Growth 11-16

0.4%Annual Growth 06-11

–3.3%

Industry Structure Life Cycle Stage Mature

Revenue Volatility Low

Investment Requirements Medium

Industry Assistance Low

Concentration Level Low

Regulation Level None

Technology Change Low

Barriers to Entry Low

Industry Globalisation Low

Competition Level Medium

FOR ADDITIONAL STATISTICS AND TIME SERIES SEE ThE APPENDIx ON PAGE 25

% c

hang

e

4

0

1

2

3

1602 04 06 08 10 12 14Year

Real personal disposable income

SOURCE: WWW.IBISWORLD.COM

% c

hang

e

10

−15

−10

−5

0

5

1703 05 07 09 11 13 15Year

Revenue Employment

Revenue vs. employment growth

Products and services segmentation (2010-11)

31.6%Mini and supermini cars

5.8%Executive and all other vehicles

27.8%Lower medium cars

5.3%Multi-purpose vehicles

4.5%Luxury and sports cars

10.2%Light commercial vehicles

8.3%Upper medium cars

6.5%Four-wheel drives


p. 19

p. 4



Key External Drivers Consumer confidence indexConsumer confidence is a key indicator of how consumers feel about the economy and their financial position. As a general rule, the higher the sentiment, the more likely consumers are to spend their income on expensive items such as cars, whether new or used. Consumer confidence is forecast to decline over the five years through 2010-11 due to the recession and rising unemployment.

Real personal disposable incomeThe amount of income that consumers have at their disposal is generally a good indicator of potential expenditure on new or used cars. Over the past five years, disposable income has been steadily rising. With historically low interest

rates, mortgage repayments have fallen, leaving more money at the disposal of customers. However, they have not been spending that money, preferring instead to save it or pay off debt due to dismal economic conditions.

World price of crude oilRises in the price of fuel have changed the way people use their cars. They have been shifting their commuting needs to public transport, or driving less in order to save on fuel costs. As a result, the demand for used cars has declined. Conversely, the long-term growth in fuel prices is causing consumers to shift from fuel-inefficient to fuel-efficient vehicles such as hybrids. Overall, IBISWorld believes that petrol- and diesel-price increases have a negative

Executive Summary

The recession has not been good to the automotive sector, and the Used Car and Light Motor Vehicle Dealers industry was not spared. IBISWorld believes that over the five years to 2010-11, industry revenue will decline by 3.3% annually to £12.41 billion. These losses mainly occurred when the financial crisis hit. Households’ and businesses’ confidence in the economy plummeted. 88% of purchases in this industry are by private customers, and they were badly hit by the

recession. As job losses mounted and households felt pessimistic about their ability to finance a used vehicle, demand for used cars crashed. The number of cars and light commercial vehicles sold is expected to fall by 1.6% annually to just under eight million vehicles over the five years to 2010-11.

The government scrappage incentive in 2009 promoted the purchase of new vehicles. This led to a fall in demand for used vehicles, particularly near-new

(vehicles aged up to three years). However, demand for used cars was already struggling prior to the recession. High fuel prices and concerns about the environment shifted the way people drive and use their cars. This has led to a fall in the demand for cars, both new and used. At the same time, cars are lasting longer due to improvement in vehicle technology, which is lengthening the replacement cycle and reducing demand for used vehicles.

The next five years will be more favourable for used car dealers, although some hurdles will remain. Dealers will face a shortage in the supply of near-new cars due to new car owners, in particular, business fleets, holding on to their vehicles for longer instead of replacing them. This will raise the price of used vehicles, although some dealers may benefit from higher profits or through the sale of older cars. Other businesses will, however, lose customers to the new car market. The UK economy will still be fragile, and uncertain conditions will continue to prevail due to high debt levels. This will negatively affect consumer and business confidence. IBISWorld believes that over the five years to 2015-16, industry revenue will rise by 0.4% annually to £12.65 billion.

Industry PerformanceExecutive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage

High fuel prices and concerns about the environment shifted the way people drive and use their cars


Industry Performance

Current Performance

The Used Car and Light Motor Vehicle Dealers industry has slowed down over the past five years. Skyrocketing fuel prices, combined with more difficult economic conditions, reduced the demand for both new and used cars. Traditionally, when the economy turned sour, households would turn away from new cars to the used car market for their car needs. However, over the past decade, improvement in vehicle technology has meant longer replacement cycles. Households started holding to their existing car for longer. Even used vehicles, particularly nearly-new ones, last longer which has been negatively affecting demand.

The recession made things worse for used car dealers as demand declined even further due to dismal consumer confidence and rising unemployment. IBISWorld believes that over the five years to 2010-11, revenue of the industry will decline by 3.3% annually to £12.41 billion, while the number of cars and light commercial vehicles is expected to fall by 1.6% annually to 7.78 million.

Consumer and business sentiment crashed due to the crisis and consumers reacted to dismal economic conditions by cutting back on unnecessary expenditure. Theoretically, the demand for used vehicles is fairly resilient during recessions as households and businesses purchase used vehicles instead of new ones. While this did happen to some extent during the current recession, the substitution effect was not significant enough to offset the overall demand for all types of vehicles. Used car and light commercial vehicle sales fell by 4.2% in 2008-09.

The scrappage incentive introduced by the government in 2009 exacerbated problems for used car dealers. Colloquially known as bangers-for-cash, the incentive provided customers of new vehicles with a £2,000 (£1,000 funded by the government and £1,000 by the car dealer) rebate when they traded in an old car. The old car, which had to be at least 10 years, was then scrapped. The scheme cost the government £300 million and ran from May 2009 to March 2010.

Key External Driverscontinued

impact on demand.

Business capital expenditureBusinesses tend to invest more into assets such as light commercial vehicles when business confidence is high and economic conditions are good. Capital

expenditure has been falling over the past five years, mainly due to the recession and poor business confidence. However, there has been some demand for used light commercial vehicles during the downturn as businesses looked to save costs by not buying new vehicles.

Inde

x

10

−30

−20

−10

0

1602 04 06 08 10 12 14Year

Consumer confidence index


% c

hang

e

4

0

1

2

3

1602 04 06 08 10 12 14Year

Real personal disposable income



Current Performancecontinued

IBISWorld believes that 400,000 new vehicles, the limit of the program, were purchased under the incentive. It negatively affected the demand for used

vehicles, particularly near-new used vehicles, as consumers chose to purchase a new vehicle rather than a used one due to the cash incentive.

better days It was not all doom and gloom during the downturn. The demand for used vans fared relatively well as businesses chose to save costs by buying a used, rather than new vehicle. Light commercial vehicles performed better than private vehicles, although overall demand did decline. In late 2009, demand conditions started to improve and the industry will continue to outperform new car demand into 2010-11. This will mainly be due to the expected crash in demand expected following the end of the scrappage incentive. At the same time, the economy

will remain fragile. Unemployment will continue to rise and even though consumer confidence is improving, there are still doubts about the strength of a recovery due to high debt issues across the UK and Europe.

IBISWorld believes that used car and light commercial vehicle sales will rise by 0.6% in 2010-11. Revenue will not increase by the same magnitude as used car prices are forecast to decline during early 2010-11. The supply of used cars will be constrained in 2011-12 and 2012-13, which is expected to push prices up again.

Car types Some used car dealers did win during the downturn, including those specialising in specialist sports vehicles as well as alternative-fuel vehicles (AFVs). The supply of used sports vehicles increased during the downturn as their owners defaulted on payments or looked to sell their cars due to job losses, lower income and decreasing confidence about their financial future. This led to a rise in the number of value-for-money near-used used sports vehicles in the used car market following the crash of the financial sector in late 2008 and enthusiasts did not hesitate to purchase them.

Petrol vehicles are the most common types of used cars sold, mainly because older cars are more likely to run on petrol than newer ones. This trend has been changing over the past five years though, and during the recession sales of vehicles running on alternative fuel rose, bucking all trends. Diesel-run used cars also saw an increase in sales, while the sale of used petrol-run cars plummeted. However, AFVs will only account for an estimated 0.5% of total used car sales in 2010-11, while diesel vehicles will only account for

27.0% of used car sales.Among AFVs, hybrid-electric vehicles

were the most popular used cars as they offer value for money. New hybrid vehicles carry a price premium while the price of used hybrids declined during the recession. AFVs have become popular over the past five years due to skyrocketing fuel prices and growing concerns about the environment. As they are typically more fuel-efficient than standard petrol cars, consumers can kill two birds with one stone when buying an AFV: save on fuel costs and save the environment at the same time. Dealers that carry environmentally-friendly vehicles fared better during the recession and will continue to gain market share in the next five years.

used car sales by fuel type, 2010-11Fuel type Share (%)

Diesel 27.0Petrol 72.5AFVs 0.5

SOURCE: IBISWORLD



In trouble This industry was in trouble even prior to the recession. Car usage trends have been changing over the past five years. British residents are driving less and holding on to their cars for longer, encouraged by a combination of high petrol prices, increasing road taxes and improvement in car technology. This has been affecting the entire automotive sector, not just used car dealers. The price of used vehicles has also been decreasing steadily over the past decade, partly due to an increase in the supply of cheaper, imported second-hand vehicles from mainland Europe. This has squeezed the margins of used car dealers.

The structure of the Used Car and Light Motor Vehicle Dealers industry has been changing. The internet has changed the way people shop for cars. Dealers with a web presence that allows consumers to browse through used vehicles online are more likely to be successful and gain market share. In this age of information, potential buyers will often compare prices and cars online before going into a used car dealership. This has led to a rise in price and product range competition between dealers.

Large dealerships which sell both new and used vehicles have been gaining

market share. Although they traditionally focused on new rather than used vehicles, this trend has reversed. Margins on used vehicles are typically higher and large dealerships have been expanding their used vehicle business. As a result, the concentration of this industry has risen and so has competition. Large dealers have the upper hand on smaller dealers as they often come with a reputation, enough finance to have online showrooms and to have a greater market reach. Smaller traditionally used car dealerships have been losing market share. The number of establishments will rise by an estimated 0.8% annually over the five years to 2010-11, mainly due to pre-recessionary growth from larger players.

The profitability of this industry has been declining over the past five years due to lower volume and prices. The increasing penetration of larger dealers mitigated the decrease in the profit margin, but once the recession hit, profitability fell across the board. IBISWorld believes that the profit margin will drop from 6.6% in 2005-06 to 4.8% in 2010-11. This result will still be better than profit margins on new cars, and new car dealers will continue to expand into the used car market.

Ageing population The vehicle parc has been ageing in the UK, although the government scrappage incentive in 2009 wiped off almost half a million old vehicles from the fleet. Similarly, the proportion of older cars sold has been rising over the past five years. In 2006, about 46.7% of used vehicles sold were aged less than six years. By 2010-11, this proportion is forecast to fall to 42.3%. During the recession, vehicles aged three years or less lost the most market share as they are seen as substitutes to new cars. In 2009, cars aged nine years and over were the only age

group to record an increase in sales, albeit a very small one. This was mainly because they are cheap, which appealed to consumers during the downturn.

used car sales by age, 2010-11Age group Share (%)

0 to 3 years 19.83 to 6 years 22.56 to 9 years 23.19 years and over 34.6

SOURCE: IBISWORLD



Supply shortage Used car dealers will face supply issues over the next few years, particularly in 2011-12 and 2012-13. The scrappage incentive that ran from May 2009 to March 2010 led to a decline in supply of old vehicles (10 years and above) from the market. About an estimated 400,000 old vehicles were scrapped under the programme, old vehicles that could have been resold. At the same time, declining new car sales during the recession meant that households and businesses are holding on to existing vehicles for longer, further aggravating the supply issue. The supply of ex-fleet vehicles which are usually aged under three years old in particularly is forecast to decline in the first couple of years of the outlook period. Companies postponed the replacement of fleet vehicles during the downturn and given

that the business environment will continue to be uncertain in the immediate future, they will not replace vehicles until things improve markedly. When they do, the vehicles will be older than three years old, hence the shortage in supply within the near-new segment.

The supply shortfall in the near-new segment will drive the price of those used vehicles up and if demand is too much, used car dealers could risk losing customers to new cars. IBISWorld believes that initially, customers of near-new cars will be more likely to buy slightly older (three to six years) vehicles, which will push the price of used cars up and improve the profitability of used car dealers. However, if the shortage of supply continues once consumer finances improve, used car dealers will undoubtedly lose customers to new car

Industry Outlook

The UK economy has been showing signs of improvement in 2010 but the road to recovery will be paved with uncertainty and high debt levels. There are fears of a prolonged downturn due to too high debt levels in the UK as well as in mainland Europe, which could impact on the health of the domestic economy. As a result of these concerns, consumer and business sentiment are expected to be mild over the next three years. Potential car buyers, still fragile from the recession, will be frugal in their expenditure and more conscious about savings levels and their ability to repay debts. Even though the unemployment rate is forecast to peak in 2011-12, it will remain high throughout the next five years, which will further drive consumers to think twice about purchasing big-ticket items, and businesses about carrying out capital expenditure. This will benefit used car dealers in 2011-12 and 2012-13 as consumers will choose to purchase a used vehicle rather than a new one, particularly in the absence of any government scrappage incentive to buy a

new vehicle.IBISWorld believes that over the five

years to 2015-16, revenue of the Used Car and Light Motor Vehicle Dealers industry will rise by 0.4% annually to £12.65 billion. This result will partially offset the decline caused by the recession. However, the demand of used cars and light commercial vehicles is expected to start declining again in 2014-15 as consumers shift back to their old buying habits. Improvement in motor vehicle technology, changes in attitudes towards driving and car ownership and the slow population growth rate are long-term issues faced by car dealers, whether new or used. The replacement cycle has lengthened over the past decade as cars now last longer, but also because British citizens have been driving less due to high fuel prices. This will adversely affect the demand for used cars. Additionally, by 2015-16, conditions in the economy will be more stable and less uncertain, which will promote consumers to shift back to the new car market, further aggravating the fall in demand for used cars.



Supply shortagecontinued

dealers. Customers of vehicles aged 10 years and over, which as mentioned will also be suffering from a shortage in

supply, will be more likely to buy a slightly less old car (six to nine years) in the short-term.

Product mix With supply shortages expected in the future and the automotive sector as a whole undoing changes in product mix, used car dealers need to be wary of which cars and light commercial vehicles they have in stock over the next five years. IBISWorld believes that cars aged between six and nine years will gain the most market share, mainly due to the supply shortfall and both ends of the age spectrum. Petrol cars will continue to lose popularity over the five years to 2015-16, particularly the older and less fuel-efficient ones. This will pose a threat to car dealers who do not stock near-new fuel-efficient vehicles. They will lose potential customers to the new car market, where alternative-fuel vehicles are expected to gain ground in the near future. The automotive sector in the UK is also backed by government assistance, such as the automotive assistance programme, which will promote the development of environmentally friendly vehicles. These vehicles will take a while to enter the used vehicles inventory and

as a result, used car dealers could lose some potential near-new car customers to the new car market.

The number of establishments in the industry is forecast to rise by 3.0% annually over the five years to 2015-16, mainly due to increasing in 2011-12 through to 2013-14. Once the used car market starts stalling again, establishment numbers will decline. Large car dealerships are expected to get bigger through mergers and acquisitions. They will also be in a better position to alter their product mix to account for the supply shortfall and increase their stock of older vehicles in order to meet demand. The profitability of the industry will increase from 4.8% in 2010-11 to an estimated 5.6% by 2015-16 mainly due to more profitable large dealers and improvement in demand conditions compared to the recessionary period. Profitability will not be as high it was pre-recession though, primarily because of smaller used car dealers fighting for market share. They will have difficulty in maintaining profitability.


Industry PerformanceIndustry value added is forecast to fall over the 10 years to 2010-11, while GDP will grow

The growth in establishment numbers will slow down in the next five years

The market for used vehicles is dwindling

Life Cycle Stage


30

25

20

15

10

5

0

–5

–10–10 100 20–5 155 25 30

% G

row

th o

f pro

fi t/G

DP

% Growth of establishments

DeclineCrash or Grow?

Potential Hidden GemsFuture Industries

Quality Growthhigh growth in economic importance; weaker companies close down; developed technology and markets

Time wastershobby Industries

MaturityCompany consolidation;level of economic importance stable

Shake-out

Shake-out

Quantity GrowthMany new companies; minor growth in economic importance; substantial technology change

Key Features of a Mature Industry

Revenue grows at same pace as economyCompany numbers stabilise; M&A stageEstablished technology & processesTotal market acceptance of product & brandRationalisation of low margin products & brands

used Car and Light Motor Vehicle Dealers



Industry Life Cycle Merger and acquisition activity, particularly among the larger major players, has been rising over the past decade. Most major players have expansion plans consisting primarily of acquiring failing car dealerships. Even though the number of establishments is forecast to rise by 2.7% annually over the ten years to 2010-11, this will mainly be due to major player expansion and the ease of entry into the industry.

Even though the industry has entered maturity, there is still scope for growth, particularly within the niche segments such as specialist sports cars and alternative-fuel vehicles. However, those segments account for a relatively small proportion of sales and are not significant enough to keep the industry in a growth phase. The attractiveness of relatively

high profit margins, compared to new cars, will see the number of establishments rise early in the five year period to 2015-16, although they will start declining again once companies realise that the market is getting smaller.

Industry value added is expected to drop by 2.1% annually over the ten years to 2010-11, mainly due to the severity of the recession and falling used car value. This performance will be below that of the economy, as GDP is forecast to grow over the same period of time. The underperformance of the industry was not only due to the recession though. The market for used vehicles, especially petrol-run used cars, has been slow even prior to the downturn. It is expected to remain slow over the next five years as consumers hold on to their cars for longer.

This industry is Mature


Products & Services Every year, close to eight million used cars and light motor vehicles are sold in the UK. The majority of them are nine years old or over, with petrol being the most common fuel type found in used cars. The motor vehicle parc declined for the first time first time in 2009 since the 1940s, due to falling new and used car sales. The 2009 scrappage incentive led to a fall in the average age of used vehicles as close to 400,000 cars aged at least ten years old were scrapped.

During the recession, most segments saw sales crash as British residents stopped buying both new and used cars The luxury and sports car segment did relatively well during the downturn. The recession led to rising repossessions of near-new luxury vehicles, which increased the supply of relatively cheap and near-new vehicles within the segment. In other words, they turned out to be bargains to those who could still afford high-end cars. Similar, used sports cars, which are typically demanded for recreational rather than commuting purposes, were a bargain. IBISWorld believes that this trend will continue in 2010-11.

Mini cars typically have engines with a capacity of less than 1.0cc and are usually cheaper and more fuel-efficient than larger vehicles. Used mini cars were one of the worst performing sub-segment in 2009, mainly because consumers chose to purchase a new mini or supermini car instead. Although the mini and supermini car segment recorded the

highest proportion of used sales in 2009, it faced significant competition from new sales due to the scrappage incentive. Supermini vehicles (for example, the Ford Fiesta) are bigger than minis with engine capacity of between 1.0 to 1.4cc. Their share of sales is forecast to rise to 31.6% in 2010-11 from 28.4% in 2009, mostly due to the expected collapse in new car sales following the ending of the scrappage incentive in March 2010.

Light commercial vehicles refers to vehicles weighing up to 3.5 tons which are used primarily for commercial purposes. This segment was resilient during the recession as businesses turned to the used vehicle market to save costs. However, it did not flourish as business activity was down across the entire economy, which negatively affected demand. The lower medium segment, which includes motor vehicles with engine capacity of between 1.3cc to 2.0cc will account for 27.8% of used sales in 2010-11, down from 23.8% five years ago. The underperformance of this segment was mainly due to consumers shifting towards smaller used cars. This trend will continue into the next five years. The executive and other segment includes all other vehicles including: specialised vehicles such as ambulances.

Trends in used cars typically lag behind new car sales. Over 70% of used car sales are petrol cars, but this is mostly due to the fact that older cars are more likely to run on petrol than on other types

KEy buyING INDuSTrIES

Z99 Consumers in the uK British residents are the major buyers of used cars.

KEy SELLING INDuSTrIES

G45.111 New Car and Light Motor Vehicle Dealers in the uK Used car dealers often obtain trade-in vehicles from their new car sales department.

O84.110 General Public Administration Activities in the uK Ex-fleet cars from government departments and businesses are supplied to used car dealers.

Z99 Consumers in the uK Used cars can also be obtained directly from consumers.

Products & MarketsSupply Chain | Products & Services | Demand Determinants Major Markets | Globalisation & Trade | business Locations

Supply Chain


Products & Markets

Major Markets There are two main markets for used cars: the commercial market and the private market. The commercial market is fairly small and mainly made up of businesses buying second-hand light commercial vehicles. Companies that buy fleet vehicles buy them new and are not in the market for used vehicles. In fact, ex-fleet vehicles are often supplied to used car dealers who then put them up for sale to the private market. The commercial used car market has been fairly resilient throughout the recession as businesses looked to the used market to save costs. Demand from commercial buyers is expected to remain steady as the economy starts improving, but will decline once normalcy returns.

The private market consists of individuals aged at least 17 years, the minimum driving age. There are about 35 million full car driving licence holders in the UK and this number has been rising steadily over the past five years. About 75% of households have at least one car, with about 30% owning two or more cars.

In other words, the market for cars is a large one, although the non-replacement car market, that is when individuals purchase an additional car without replacing any existing car, is reaching saturation. It is not too surprising to learn that the number of used cars sold will fall by 1.6% annually over the five years to 2010-11.

The market demographics of private used car buyers have not changed much over the past five years. The top two buying groups (those aged 35 to 44, and 25 to 34) have both gained some share during the period, mainly due to thriftiness brought about by the recession. This led many individuals to purchase a used car rather than a new one. Additionally, near-new used vehicles proved to be popular within both age groups, as they represent value for money. The 35 to 44 age group are traditionally new car buyers, but the recession led them to think twice about expensive purchases, thereby promoting the demand for used cars.

Products & Servicescontinued

of fuel. The dominance of used petrol cars has been declining over the past five years, and during the recession, sales of used diesel vehicles and AFVs actually rose. Consumers are well aware of the fact that fuel-inefficient old vehicles add

to fuel bills. As a result, they looked to purchase more environmentally friendly used vehicles during the downturn. IBISWorld believes that this trend will continue even as the economy improves in the next five years.

Products and services segmentation (2010-11)

Total £12.4bn

31.6%Mini and supermini cars

5.8%Executive and all other vehicles

27.8%Lower medium cars

5.3%Multi-purpose vehicles

4.5%Luxury and sports cars

10.2%Light commercial vehicles

8.3%Upper medium cars

6.5%Four-wheel drives



Products & Markets

Globalisation & Trade International trade occurs at the manufacturing level and is not accounted for at the retail level. Trade is quite important for new car dealers but not as much for used car dealers. The majority of used vehicles are sourced domestically and sold to British residents.

Small independent dealers are generally private companies owned by Britons, while most of the large

franchised dealerships are also domestic companies. The main exception is Sytner Group, which is owned by US-based Penske Automotive Group. Some of the other major players, such as Pendragon and Inchcape, operate dealerships outside of the UK. All in all though, there is little globalisation within the industry due to the nature of the product being sold.

Major Marketscontinued

The 17-24 age group is also significant buyers of used cars as individuals within that age group are often buying their first car, which is more often than not, a second-hand one. However, the group lost share during the recession as they put off buying a car or even passing their driving

test altogether. The 65 and over market for used cars has been rising over the past five years due to an ageing population. The 55 to 64 age group saw some growth during the recession, particularly when it comes to used specialist cars, which proved to be a bargain.

Major market segmentation (2010-11)

Total £12.4bn

22.4%Consumers aged 35 to 44





12%Commercial market

11.3%Consumers aged 65 and older



Products & Markets


used car sales (%)

Cold Zone (<10) <25 <50 Hot Zone (<100) Not applicable

SCOTLAND8.1

NOrTHErN IrELAND

3.0

NOrTH EAST

3.4NOrTH wEST

10.8

yOrKSHIrE8.5

EAST MIDLANDS

8.0

wEST MIDLANDS

9.4

wALES5.4

SOuTH wEST

9.3

SOuTH EAST

17.1

EAST OF ENGLAND

8.6

LONDON8.4

business Locations 2011


Products & Markets

business Locations The chart shows the volume of used vehicle sales in the UK by region. The geographic location of sales in this industry follows population and income trends as well as other ownership trends. For example, London is typically under-represented, compared to its share of the population, within the automotive sector due to high-density living and reliance on public transport. Owning a car is seen to be impractical in London and about 40% of Londoners do not own a car, compared with the UK average of 25%. However, London is home to high-income earners and they are likely to purchase near-new vehicles in the more niche markets such as luxury vehicles.

Contrary to London, the South East is generally over-represented within the automotive sector compared to its share of the population. The region has many features conducive to growth such as being located close to London and being home to hi-tech industries. As a result, the South East is a high-income earning region, with 80% of residents owning at least one car. Unlike London, the South East is larger in geographical size and

less densely populated, which promotes car usage. Used car buyers in this region are more likely to purchase near-new vehicles, sports cars and other high-end vehicles. Other regions are more or less in line with what their share of the population might suggest.

Perc

enta

ge

20

0

4

8

12

16

Used car salesPopulation

Distribution of used car sales vs. population


York

shire

East

of E

ngla

nd

Nor

th E

ast

Nor

ther

n Ir

elan

d

Sout

h Ea

st

Wal

es

Wes

t Mid

land

s

East

Mid

land

s

Lond

on

Nor

th W

est

Scot

land

Sout

h W

est


Cost Structure benchmarks

The profitability of selling used cars is generally higher than selling new cars. In 2010-11, the profit margin of this industry is expected to be 4.8%, a fall from 6.6% five years ago. The decline in profitability will be caused by a variety of factors including: higher employment costs, lower prices, intensifying competition and dropping sales. Once the economy improves, the profitability of this industry will increase. However, it is not expected to be as high as before due to higher competition. There will be more dealers fighting for market share and profit in a market which will be sluggish over the next five years.

The uncertainty around demand for used cars, as well as the supply of vehicles led to increases in inventory

costs over the past five years. Purchases is made up of all costs associated with purchasing used cars for resale, including inventory and any related finance costs. They are expected to account for close to 75% of revenue in 2010-11. Labour costs are forecast to account for about 5.8% of revenue and have been rising over the past five years, mainly due to the recession. Employment and wage cuts undertaken in 2008-09 and 2009-10 were not enough to offset the decline in revenue, which pushed labour costs up. They are forecast to fall in 2010-11 as revenue improves. The average industry wage is expected to grow by 0.6% annually over the five years to 2010-11, to about £19,500.

Depreciation accounts for about 1.1%

Key Success Factors Maintaining a good reputationReputation is a key success factor as having a bad reputation can ruin a company in this industry. Word of mouth also helps to drive business.

Ability to be located where customers areBeing located close to customers is important, but dealers also need to be in an area that is not already overrun by other dealers. Dealerships need to be in locations that are easy to get to but, also in opportunistic locations such as motorway exits.

Providing superior customer serviceCustomer service, such as handy opening hours will open the door to more customers.

Stocking a wide variety of vehiclesStocking a wide range of vehicles will ensure that any customer will find what they want. However, specialist used car dealers can succeed by specialising in niche markets.

Having competent salespeopleUsed car dealers need to employ staff who can close sales and bring repeat customers.

Having an internet presenceDealers with a physical location still need to have websites and provide their portfolio online, as potential customers often browse the web for ideas before buying a used car.

Market Share Concentration

The top four players in the industry will account for close to 30% of industry revenue in 2010-11. Concentration has been rising over the past five years, as major players acquire and take over smaller or failing dealerships. Major players and the larger players typically

operate both new and used dealerships and have a wide range of cars, with stores across the UK. The remaining players are typically small family-owned independent dealers who only account for a very small part of the industry each.

Level Concentration in this industry is Low

IBISWorld identifies 250 Key Success Factors for a business. These are the most important for this industry

Competitive LandscapeMarket Share Concentration | Key Success Factors Cost Structure benchmarks | barriers to Entry


Competitive Landscape

barriers to Entry There are low barriers to entry when setting up a used car dealership, particularly when compared to setting up a new car dealership. A new entrant can enter by buying an existing dealership or by starting one up from scratch. As a general rule, the former method is easier but not necessarily cheaper. Still, overall set-up costs are lower than they would be for a new car dealership and only a minor barrier to entry.

Existing competitors can be a hindrance. Because entry barriers are low, there may already be multiple used car dealerships within a local area. Existing dealers will already have a reputation, which can further negatively affect the new entrant.

Building a good reputation takes time and newcomers will have to compete against established and trusted used car dealers, which will mitigate sales. Other than that, there are few barriers to entry in this industry.

Cost Structure benchmarkscontinued

of revenue, mainly due to costs association with large retail spaces required by used car dealers. Other costs

include taxes, advertising, marketing, transport, insurance and other services required by car dealers.

Industry Costs and Average Sector Costs■ Profi t■ rent■ utilities■ Depreciation■ Other■ wages■ Purchases

Industry Costs (2010-11)

Average Costs of all Industries in sector (2010-11)

0 100%

4.8Profit

74.85.812.11.1

4.8Profit

53.141.0

INDuSTry CODE AND TITLE 2005-2010 2011-2015

G45.111 New Car and Light Motor Vehicle Dealers in the uK • −O84.110 General Public Administration Activities in the uK n/a n/a

Z99 Consumers in the uK n/a n/a

Costs for operators in the Used Car and Light Motor Vehicle Dealers industry are affected by the price of goods and services from supplier industries. IBISWorld has estimated the trends of key input prices over the previous fi ve years and for the coming fi ve years. − is good news for this industry as IBISWorld expects the price of key inputs to fall; • shows where this industry is negatively affected as IBISWorld expects the price of key inputs to rise; - means price changes will not be a key issue for the industry.



0.2

1.21.3

barriers to entry checklist Level

Competition MediumConcentration LowLife cycle stage MatureInvestment requirements MediumTechnology change LowRegulation & policy NoneIndustry assistance Low


Level & Trend Barriers to Entry in this industry are Low and Steady


Player Performance Pendragon is a franchised motor car dealership operating mainly in the UK, with some stores in the US state of California. The company sells new and used cars and commercial vehicles and is also involved in the leasing of vehicles. Pendragon operates the following brand stores: Stratstone (luxury vehicles such as Aston Martins), Evans Halshaw and Chatfields (commercial vehicles). The company’s strategy is to grow through acquisitions and to differentiate themselves from competitors by providing an integrated service (for example, hiring services as well as dealership management services, all under one roof). About half of Pendragon’s UK used car sales is generated by Stratstone. Evans Halshaw accounts for about 49%, while only 1% of used car sales are from Chatfields.

Over the five years to 2009, revenue grew by a mere 0.1% annually, mainly due to the decline in 2008 and 2009. Prior to the recession, revenue was rising mainly due to acquisitions and strong used car demand. In 2006 for example, Pendragon acquired Reg Vardy plc and

its 97 car dealerships across the UK. The company also acquired other businesses during that year and 24 Dixons dealerships in 2007. The company’s troubles started in 2008 due to the global financial crisis and Pendragon recorded losses during the year.

In 2009, Pendragon operated 276 franchises, employed over 10,000 staff and saw revenue fall by 23.3% to £3.19 billion. The decline in revenue was mainly due to the downturn in the UK economy and car market, with both new car and commercial vehicles registering significant drops. Revenue from used vehicle sales amounted to £962.7 million in 2009, a 15.5% drop on the previous year. Due to cost-cutting measures and the closing down of unprofitable dealerships, Pendragon was able to make a net profit of £0.8 million, reversing the massive losses it made in 2008. Pendragon believes that future profitability lies within the used car, rather than new car segment. The company is expected to gain market share through acquisitions in the next five years.

Major CompaniesPendragon plc | Arnold Clark AutomobilesPenske Automotive Group | Inchcape retail | Other

Major players(Market share)

72.5%Other

Pendragon plc 8.4%

Arnold Clark Automobiles 6.7%

Penske Automotive Group 6.6%

Inchcape retail 5.8%


Pendragon – fi nancial performance

year*revenue

(£ million) (% change)NPAT

(£ million) (% change)

2004 3,173.2 N/C 31.6 N/C

2005 3,284.5 3.5 27.5 -13.0

2006 5,058.5 54.0 50.1 82.2

2007 5,060.2 N/A 43.2 -13.8

2008 4,162.4 -17.7 -155.3 N/C

2009 3,191.7 -23.3 0.8 N/C

*year end DecemberSOURCE: ANNUAL REPORT

Pendragon plc Market share: 8.4%


Major Companies

Player Performance Formerly United Auto Group, Penske Automotive Group (PAG) owns and operates about 156 franchises in the US and 148 internationally, primarily in the UK. The company offers a range of 40 vehicle brands, with approximately 96% of their revenue coming from the combined sales of luxury brands such as Audi, BMW, Cadillac and Porsche.

PAG struggled to keep revenue up in 2008 and consolidated revenue declined by 18.2% in 2009 to US $9.50 billion (approximately £ 6.07 billion). PAG noted that difficult financing conditions negatively affected their businesses since late 2008. However, the fourth quarter of 2009 (three months to December) brought a glimmer of hope, with sales starting to show signs of recovery. PAG reported that UK sales, new and used,

rose by 30% during the last quarter, although it was increasing off a low base.

Sytner Group Limited PAG’s presence in the UK is through Sytner Group Limited, headquartered in Leicester. The group was founded in the 1960s by Frank and Alan Sytner and specialised in the sales of BMW and specialist used vehicles. In 2002, Sytner group was acquired by Penske Automotive Group. The company continues to focus on the sale of new and used prestige and specialist cars today. It operates about 138 outlets in the UK and employs over 5,000 staff.

Being a privately-held company, financial information about Sytner Group is limited. Over the four years to 2008, revenue rose by 9.6% annually, while net

Player Performance Arnold Clark is a private and family-run company headquartered in Glasgow, Scotland. The business sells new and used motor vehicles and typically has over 10,000 cars in stock. Arnold Clark also offers servicing, bodyshop, rental and repair services. The company operated 122 outlets across the UK in 2009 and sells over 200,000 cars each year. In 2008, revenue amounted to £2.21 billion. IBISWorld believes that used car sales generated about £800 in revenue in that year.

Being a privately-owned company, information about the business is limited. Revenue grew by 8.6% annually over the

five years to 2008, while net profit declined by 12.8% annually. The rise in revenue was primarily due to aggressive expansion strategies over the past decade. In 2008, the company opened its largest dealership in Stafford, which can hold about 1,000 vehicles and created jobs for 200 new employees.

Even though Arnold Clark was not immune to the recession, it intends on opening four new branches in 2010, in Dumfries, Workington, Carlisle and Penrith. The branches are being acquired from the GK group, another car dealer. Arnold Clark will gain market share during the year as a result of the acquisitions.

Arnold Clark – fi nancial performance

year*revenue



2004 1,591.3 N/C 40.6 N/C

2005 1,669.8 4.9 38.6 -4.9

2006 1,873.4 12.2 52.7 36.5

2007 2,083.9 11.2 51.1 -3.0

2008 2,210.2 6.1 23.5 -54.0


Arnold Clark Automobiles Market share: 6.7%

Penske Automotive Group Market share: 6.6% Industry brand Names Sytner Group Limited


Major Companies

Player Performance Inchcape is a motor vehicle dealer with operations in the UK, North Asia, South Asia and emerging markets such as Russia and China. The company operates several vertically integrated businesses including: vehicle, financing and insurance, servicing and part retailing. The company’s strategy is to expand its businesses across the most profitable geographical locations. Inchcape operates 128 franchised retail centres across the UK, selling brands such as KIA, Ford, Audi, Mini and BMW. IBISWorld believes that used car revenue in the UK

amounted to an estimated £700 million in 2009.

Over the four years to 2009, revenue rose by 5.6% annually, while net profit after tax decreased by 7.7% annually. The majority of the gain in revenue was felt in 2007 due to expansion strategies, mainly in emerging markets such as Russia. The decline in profit was the result of competitive pricing strategies, which forced prices and profit down. On the flip side, Inchcape did not fare so well during the crisis.

Revenue amounted to £5.58 billion in

Player Performancecontinued

income fell by 4.0% annually. This above-average performance was primarily due to acquisitions and expansion strategies. The most significant one in 2008 was the purchase of five dealerships from Richard Alexander Limited, which was then in administration. The acquisition saved

300 jobs. Despite poor economic conditions, Sytner Group continued to acquire businesses into 2009. As reported by its parent company PAG, Sytner’s sales are already started to recover, with UK revenue up by close to 40% during the three months ended December 2009.

Sytner group – fi nancial performance

year*revenue



2004 1,569.2 N/C 23.7 N/C

2005 1,630.4 3.9 21.2 -10.5

2006 1,978.7 21.4 34.0 60.4

2007 2,401.0 21.3 23.5 -30.9

2008 2,262.1 -5.8 20.1 -14.5


Inchcape retail – fi nancial performance

year*revenue



2005 4,488.1 N/C 126.6 N/C

2006 4,842.1 7.9 173.9 37.4

2007 6,056.8 25.1 176.4 1.4

2008 6,259.8 3.4 51.4 -70.9

2009 5,583.7 -10.8 92.0 79.0


Inchcape retail Market share: 5.8%


Major Companies

Other Companies The other larger players in this industry are typically car dealers with significant new car sales businesses as well as used car sales businesses. However, the industry is also made up of small family businesses, often with only one or two locations. These smaller dealers typically only specialise in used vehicles sales and do not generate a significant amount of revenue compared to larger players. They do not have much market power. Two of the larger other players are discussed below.

Lookers plc Estimated market share: 4.5%Lookers is a motor vehicle retail business operating 120 stores around the UK. Marques sold include: Aston Martin, Lexus, Citroen and Seat. The company also operates an independent aftermarket parts division. The company fared well during the dismal year that 2009 was for car sales, recording about 61,400 new motor

vehicle sales. Group revenue amounted to £1,749 million in 2009, while revenue from the sale of used cars amounted to £542.7 million, down by 2.5% on the previous year.

Mercedes-Benz Retail Group Estimated market share: 3.5%Mercedes-Benz Retail Group is a group of over 40 dealers primarily located in London, Manchester and Birmingham. The dealership sells new and used Mercedes-Benz passenger cars, Smart cars as well as commercial vehicles and is a division of Mercedes-Benz UK. The retail group was founded in 2001. In 2008, the group sold about 17,400 new vehicles and 30,300 used vehicles. Revenue amounted to £1.15 billion, representing a 7.9% decline on the previous year, while a net loss of £157 million was recorded. The company believes that its negative performance was primarily due to the economic downturn in the second half of 2008.

Player Performancecontinued

2009, a 10.8% decline on the previous year, while net profit was recorded at £95.0 million. Retail car sales in the UK amounted to £2.01 billion (a 10.9% fall) in 2009 and a trading profit margin of 2.1% was generated. Like-for-like sales

(which exclude the effects of acquisitions and other one-off events) decreased by 3.9%. This result was slightly above the industry average, mainly due to the government scrappage incentive but also due to a resilient service business.


Investmentrequirements

The labour to capital ratio in 2010-11 will amount to 5.27:1, which implies that for every unit of capital employed, 5.27 units of labour are required. Competent salespeople are required in order to close sales and provide superior customer service. Good sales people can help bring in more business through word of mouth and by building a good reputation for the dealership. As a result, labour is important.

On the flip side, capital costs as measured by depreciation are also significant. This is mainly because dealerships, whether new or used, require large spaces as well as fixtures and fittings. These costs are quite significant for used car dealerships as their revenue is not as high as new car dealerships. As a result, capital expenditure as a percentage of revenue is much higher for used car dealers than new car dealers.

IBISWorld has scored key elements of industry structure on a scale of 1 to 9 – the higher the figure, the greater the risks to businesses operating in the industry.

Operating conditions in the Used Car and Light Motor Vehicle Dealers industry

are less risky than in other industries in the economy. The industry structural risk index totals 47.6 points compared to 52.4 points for the economy as a whole (100 points equates to extremely poor operating conditions).

used Car and Light Motor Vehicle Dealers Economy

Re

venu

e Vola

tility

Barriers to Entry Com

petition Exports

Life Cycle Stage Levels of Assistance Imports


Structural risk Index

Industry relax PointsExportsImportsrevenue Volatility

Industry Pressure Pointsbarriers to EntryLevels of Assistance

52.4Score

Re

venu

e Vola

tility

Barriers to Entry Com

petition Exports

Life Cycle Stage Levels of Assistance Imports

47.6Score

Level The level of investment required is Medium

Capital intensity

1.0

0.0

0.2

0.4

0.6

0.8

SOURCE: WWW.IBISWORLD.COMDotted line shows a high level of capital intensity

Capital units per labour unit

Used Car and Light Motor

Vehicle Dealers

Wholesale and Retail Trade;

Repair of Motor

Economy

Operating ConditionsStructural risk Index | Investment requirements


Operating Conditions

Investmentrequirementscontinued

Tools of the Trade: Growth Strategies for Success


Labo

ur In

tens

ive Capital Intensive

Change in Share of the Economy

New Age Economy

recreation, Personal Services, Health and Education. Firms benefi t from personal wealth so stable macroeconomic conditions are imperative. Brand awareness and niche labour skills are key to product differentiation.

Traditional Service Economy

wholesale and retail. Reliant on labour rather than capital to sell goods. Functions cannot be outsourced therefore fi rms must use new technology or improve staff training to increase revenue growth.

Old Economy

Agriculture and Manufacturing. Traded goods can be produced using cheap labour abroad. To expand fi rms must merge or acquire others to exploit economies of scale, or specialise in niche, high-value products.

Investment Economy

Information, Communications, Mining, Finance and real Estate. To increase revenue fi rms need superior debt management, a stable macroeconomic environment and a sound investment plan.

used Car and Light Motor Vehicle Dealers


Key Statisticsrevenue

(£ million)

Industry Value Added

(£ million)Establish-

ments EnterprisesEmployment

(People) Exports Importswages

(£ million)Domestic Demand

used car sales (‘000)

2000-01 13,704.0 1,795.3 8,254 8,200 40,235 -- -- 685.2 N/A N/A2001-02 13,847.5 1,795.6 8,534 8,482 41,365 -- -- 701.7 N/A 7,408.32002-03 14,434.2 1,958.9 8,893 8,830 44,651 -- -- 804.1 N/A 7,850.82003-04 14,600.0 2,047.8 9,483 9,420 45,904 -- -- 894.4 N/A 8,294.82004-05 14,759.2 2,050.1 10,123 10,051 45,000 -- -- 898.9 N/A 8,566.72005-06 14,662.6 1,981.0 10,664 10,589 45,136 -- -- 852.0 N/A 8,411.92006-07 14,369.5 1,983.0 11,332 11,150 45,203 -- -- 890.9 N/A 8,419.72007-08 13,882.6 1,806.0 11,605 11,416 40,023 -- -- 792.5 N/A 8,313.52008-09 12,999.3 1,689.5 11,760 11,553 39,000 -- -- 766.6 N/A 7,968.02009-10 12,393.5 1,524.4 11,250 11,040 37,500 -- -- 743.7 N/A 7,729.02010-11 12,406.0 1,451.5 11,100 10,882 37,000 -- -- 719.5 N/A 7,775.32011-12 12,678.9 1,521.5 11,570 11,332 37,023 -- -- 722.7 N/A N/A2012-13 13,135.3 1,628.8 12,453 12,184 37,965 -- -- 761.8 N/A N/A2013-14 13,161.6 1,671.5 13,126 12,831 37,502 -- -- 737.1 N/A N/A2014-15 12,964.2 1,620.5 13,000 12,609 37,412 -- -- 739.0 N/A N/A

IVA/revenue (£)

Imports/Demand (%)

Exports/revenue (%)

revenue per Employee

(£’000)wages/revenue

(%)Employees

per Est.Average wage

(£)

Share of the Economy

(%)2000-01 0.13 N/A N/A 340.60 5.00 4.87 17,029.95 0.162001-02 0.13 N/A N/A 334.76 5.07 4.85 16,963.62 0.152002-03 0.14 N/A N/A 323.27 5.57 5.02 18,008.56 0.162003-04 0.14 N/A N/A 318.06 6.13 4.84 19,484.14 0.172004-05 0.14 N/A N/A 327.98 6.09 4.45 19,975.56 0.162005-06 0.14 N/A N/A 324.85 5.81 4.23 18,876.29 0.152006-07 0.14 N/A N/A 317.89 6.20 3.99 19,708.87 0.152007-08 0.13 N/A N/A 346.87 5.71 3.45 19,801.11 0.142008-09 0.13 N/A N/A 333.32 5.90 3.32 19,656.41 0.132009-10 0.12 N/A N/A 330.49 6.00 3.33 19,832.00 0.122010-11 0.12 N/A N/A 335.30 5.80 3.33 19,445.95 0.112011-12 0.12 N/A N/A 342.46 5.70 3.20 19,520.30 0.122012-13 0.12 N/A N/A 345.98 5.80 3.05 20,065.85 0.122013-14 0.13 N/A N/A 350.96 5.60 2.86 19,654.95 0.122014-15 0.12 N/A N/A 346.53 5.70 2.88 19,753.02 0.12

Figures are inflation-adjusted 2011 dollars. Rank refers to 2011 data.

revenue (%)

Industry Value Added

(%)

Establish-ments (%)

Enterprises (%)

Employment (%)

Exports (%)

Imports (%)

wages (%)

Domestic Demand

(%)used car sales

(%)2001-02 1.0 0.0 3.4 3.4 2.8 N/A N/A 2.4 N/A N/A2002-03 4.2 9.1 4.2 4.1 7.9 N/A N/A 14.6 N/A 6.02003-04 1.1 4.5 6.6 6.7 2.8 N/A N/A 11.2 N/A 5.72004-05 1.1 0.1 6.7 6.7 -2.0 N/A N/A 0.5 N/A 3.32005-06 -0.7 -3.4 5.3 5.4 0.3 N/A N/A -5.2 N/A -1.82006-07 -2.0 0.1 6.3 5.3 0.1 N/A N/A 4.6 N/A 0.12007-08 -3.4 -8.9 2.4 2.4 -11.5 N/A N/A -11.0 N/A -1.32008-09 -6.4 -6.5 1.3 1.2 -2.6 N/A N/A -3.3 N/A -4.22009-10 -4.7 -9.8 -4.3 -4.4 -3.8 N/A N/A -3.0 N/A -3.02010-11 0.1 -4.8 -1.3 -1.4 -1.3 N/A N/A -3.3 N/A 0.62011-12 2.2 4.8 4.2 4.1 0.1 N/A N/A 0.4 N/A N/A2012-13 3.6 7.1 7.6 7.5 2.5 N/A N/A 5.4 N/A N/A2013-14 0.2 2.6 5.4 5.3 -1.2 N/A N/A -3.2 N/A N/A2014-15 -1.5 -3.1 -1.0 -1.7 -0.2 N/A N/A 0.3 N/A N/A

Annual Change

Key ratios

Industry Data

SOURCE: WWW.IBISWORLD.COMFigures are inflation adjusted to 2010-11.


Jargon & Glossary

bArrIErS TO ENTry Barriers to entry can be high, medium or low. high means new companies struggle to enter an industry, while low means it is easy for a firm to enter an industry.

CAPITAL/LAbOur INTENSITy An indicator of how much capital is used in production as opposed to labour. Level is stated as high, medium or low. high is a ratio of less than £3 of wage costs for every £1 of depreciation; medium is £3 to £8 of wage costs to £1 of depreciation; low is greater than £8 of wage costs for every £1 of depreciation.

DOMESTIC DEMAND The use of goods and services within the UK; the sum of imports and domestic production minus exports.

EMPLOyMENT The number of working proprietors, partners, permanent, part-time, temporary, casual managerial and executive employees.

ENTErPrISE A division that is separately managed and keeps management accounts. The most relevant measure of the number of firms in an industry.

ESTAbLISHMENT The smallest type of accounting unit within an enterprise; it usually consists of one or more locations in which it operates.

EXPOrTS The total sales and transfers of goods produced by an industry that are exported.

IMPOrTS The value of goods and services imported with the amount payable to non-residents.

INDuSTry CONCENTrATION IBISWorld bases concentration on the top four firms. Concentration is identified as high, medium or low. high means the top four players account for over 70% of revenue; medium is 40% to 70% of revenue; low is less than 40%.

INDuSTry rEVENuE The total sales revenue of the industry, including sales (exclusive of excise and sales tax) of goods and services; plus transfers to other firms of the same business; plus subsidies on production; plus all other operating income from outside the firm (such as commission income, repair and service income, and rent, leasing and hiring income); plus capital work done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed tangible assets are excluded.

INDuSTry VALuE ADDED The market value of goods and services produced by an industry minus the cost of goods and services used in the production process, which leaves the gross product of the industry (also called its Value Added).

INTErNATIONAL TrADE The level is determined by: Exports/revenue: low is 0% to 5%; medium is 5% to 20%; high is over 20%. Imports/domestic demand: low is 0% to 5%; medium is 5% to 35%; and high is over 35%.

LIFE CyCLE All industries go through periods of growth, maturity and decline. An average life cycle lasts 70 years. Maturity is the longest stage at 40 years with growth and decline at 15 years each.

NON-EMPLOyING ESTAbLISHMENTS Businesses with no paid employment and payroll are known as non-employing establishments. These are mostly set up by self-employed individuals.

VOLATILITy The level of volatility is determined by the percentage change in revenue over the past five years. Volatility levels: very high is greater than ±20%; high volatility is between ±10% and ±20%; moderate volatility is between ±3% and ±10%; and low volatility is less than ±3%.

wAGES The gross total wages and salaries of all employees of the establishment.

Industry Jargon

IbISworld Glossary

AFV Alternative-fuel vehicles. Vehicles that run on the following alternative power: petrol-electric, petrol-alcohol, electric only and petrol-gas.

LIGHT MOTOr VEHICLE Motor vehicles, whether on-road or off-road, weighing up to 3.5 tons. Some minivans are included in this category.

SCrAPPAGE INCENTIVE The incentive is usually in the form of a cash rebate to customers who trade in an old car when purchasing a new vehicle. The old car is then scrapped.

SuV Sports utility vehicle. A light motor vehicle, more often than not with four-wheel drive capability.

VEHICLE PArC The total number of motor vehicles in use.

Disclaimer

This product has been supplied by IBISWorld Ltd. (‘IBISWorld’) solely for use by its authorised licensees strictly in accordance with their licence agreements with IBISWorld. IBISWorld makes no representation to any other person with regard to the completeness or accuracy of the data or information contained herein, and it accepts no responsibility and disclaims all liability (save for liability that cannot be lawfully disclaimed) for loss or damage whatsoever suffered or incurred by any other person resulting from

the use of, or reliance upon, the data or information contained herein. Copyright in this publication is owned by IBISWorld Ltd. The publication is sold on the basis that the purchaser agrees not to copy the material contained within it for other than the purchaser’s own purposes. In the event that the purchaser uses or quotes from the material in this publication – in papers, reports or opinions prepared for any other person – it is agreed that it will be sourced to IBISWorld Ltd.

At IBISWorld, we know that industry intelligence is more than assembling factsIt is combining data with analysis to answer the questions that successful businesses askIdentify high-growth, emerging and shrinking marketsArm yourself with the latest industry intelligenceAssess competitive threats from existing and new entrantsbenchmark your performance against the competitionMake speedy market-ready, profit-maximising decisions

who is IbISworld?We are strategists, analysts, researchers and marketers. We provide answers to information-hungry, time-poor businesses. Our goal is to provide real-world answers that matter to your business in our hundreds of UK industry reports. When tough strategic, budget, sales and marketing decisions need to be made, our suite of industry and risk intelligence products give you deeply researched answers quickly.

IbISworld MembershipIBISWorld offers tailored membership packages to meet your needs.

Copyright 2010 IBISWorld Pty

www.ibisworld.co.uk | [email protected]

IBISWorld Industry Report G45.112 Used Car and - just … UK Auto...IBISWorld Industry Report...

Documents

Transcript of IBISWorld Industry Report G45.112 Used Car and - just … UK Auto...IBISWorld Industry Report...