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KN34027 KEY NOTE MOTOR INDUSTRY MARCH 1997

ISBN 1-85765-673-3

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Table of Contents

Executive Summary

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TABLE OF CONTENTS

Executive Summary

Introduction

WORLD CAR PRODUCTION

BACKGROUND TO UK DEMAND

VEHICLES IN USE IN THE UK

VEHICLES LICENSED

NEW VEHICLE REGISTRATIONS IN THE UK

NEW REGISTRATIONS BY TYPE OF VEHICLE

VALUE OF UK PRODUCTION

INTERNATIONAL TRADE

PARTS, TYRES AND ACCESSORIES

EMPLOYMENT

TRADE ASSOCIATIONS

MOTOR EXHIBITIONS

Table 1.1: Car and Commercial Vehicle Production in Leading Countries (number of vehicles), 1995

Table 1.2: Gross Domestic Product, Consumer Expenditure and Expenditure on Motor Vehicles at Constant 1990 Prices (£m), 1991-1995

Table 1.3: Vehicles in Use in the UK (number of vehicles), 1991-1995

Table 1.4: Number of Vehicles Currently Licensed in Great Britain (000), 1991-1995

Table 1.5: New Motor Vehicle Registrations Each Year in the UK (number of units), 1991-1995

Table 1.6: New Registrations by Type of Vehicle in Great Britain (000), 1991-1995

Table 1.7: Value of UK Production (£m), 1991-1995

Table 1.8: UK Car and Commercial Vehicle Production (number of vehicles) 1990-1996

Table 1.9: UK International Trade in Cars and Commercial Vehicles by Value and Volume (£m and 000), 1991-1995

Table 1.10: UK International Trade in Parts, Tyres and Accessories (£m), 1991-1995

Table 1.11: Employment in Transport Equipment, Motor Vehicles and Parts (000), 1991-1995

Table 1.12: Principal Trade Bodies Associated with the UK Motor Industry, 1996

Cars

INDUSTRY STRUCTURE

MOTORING ORGANISATIONS

CUSTOMER PROFILE

INDUSTRY SUPPLY

VOLUME DOMESTIC MANUFACTURERS - CAR PRODUCTION BY MARQUE

ADVERTISING

MARKET SIZE AND TRENDS

FOREIGN TRADE

CAR REGISTRATIONS

RECENT DEVELOPMENTS

FUTURE PROSPECTS

Table 2.1: Number of Cars Currently Licensed and New Registrations in Great Britain (000), 1991-1996

Table 2.2: Company Cars as a percentage of New Registrations ( percent), 1991-1996

Table 2.3: Top Ten UK Registrations by Model Range (number and percent), January-November 1995 and 1996

Table 2.4: Top Selling Diesel Cars in the UK (number and percent), January-November 1995 and 1996

Table 2.5: Top Ten Selling Automatic Cars in the UK (number and percent), January-November 1995 and 1996

Table 2.6: Cars Modified for Disabled Drivers (number), 1991-1996

Table 2.7: Leading Suppliers of Cars to the UK Market by Sales (£m), 1994/1996

Table 2.8: Car Production in the UK by Manufacturer (number of units), 1991-1995

Table 2.9: Main Media Advertising Expenditure by the Major Manufacturers and Importers (£000), Years Ending March 1994-1996

Table 2.10: Main Media Advertising Expenditure by Top Motor Distributors (£000), Years Ending March 1994-1996

Table 2.11: Main Media Advertising Expenditure on Car Dealer Support by Manufacturers and Importers (£000), Years Ending March 1994-1996

Table 2.12: Main Media Advertising Expenditure on Breakdown Services (£000), Years Ending March 1994-1996

Table 2.13: Apparent UK Market for Cars, Commercial Vehicles and Engines (£m at msp), 1992-1996

Table 2.14: UK Car Production by Engine Capacity (number of cars), 1992-1995

Table 2.15: New Registrations of Cars in the UK by Leading Manufacturers (number and percent share), 1996

Table 2.16: Imports of Cars from the European Union (number and £m), 1994 and 1995

Table 2.17: Imports of Cars from the Rest of the World (number and £m), 1994 and 1995

Table 2.18: Exports of Cars to the European Union (number and £m), 1994 and 1995

Table 2.19: Exports of Cars to the Rest of the World (number and £m), 1994 and 1995

Table 2.20: New Car Registrations in Western Europe (number of units and percent), 1994 and 1995

Table 2.21: Forecasts of Output and New Registrations for Cars in the UK (000), 1997-2000

Commercial Vehicles

INDUSTRY STRUCTURE

COMMERCIAL VEHICLE PRODUCTION

TRADE ASSOCIATIONS

CUSTOMER PROFILE

INDUSTRY SUPPLY

TOTAL UK COMMERCIAL VEHICLE REGISTRATIONS

ADVERTISING

MARKET SIZE AND TRENDS

RECENT DEVELOPMENTS

FUTURE PROSPECTS

Table 3.1: Local Bus Passenger Journeys in Great Britain (million), 1990/1991-1994/1995

Table 3.2: Goods Transport in Great Britain by Mode (million tonnes), 1991-1995

Table 3.3: Commercial Vehicle Production (number of units), 1991-1996

Table 3.4: Buses and Coaches Currently Licensed (000), 1991/1992-1994/1995

Table 3.5: New Registrations by Vehicle Category (number of units), 1993-1996

Table 3.6: UK Commercial Vehicle Registrations by British Manufacturers (number of units), 1994 and 1995

Table 3.7: Total UK Commercial Vehicle Registrations, 1996

Table 3.8: Main Media Advertising Expenditure on Commercial Vehicles and Trucks (£000), Years Ending March 1994-1996

Table 3.9: Apparent UK Market for Commercial Vehicles (£m at msp), 1992-1996

Table 3.10: Forecasts of Production and New Registrations for Commercial Vehicles (000 units), 1997-2000

Motorcycles

INDUSTRY STRUCTURE

TRADE ASSOCIATIONS

CUSTOMER PROFILE

INDUSTRY SUPPLY

EXHIBITIONS

ADVERTISING

MARKET SIZE AND TRENDS

RECENT DEVELOPMENTS

FUTURE PROSPECTS

Table 4.1: Main Media Advertising Expenditure on Motorcycles and Scooters (£000), Years Ending March 1994-1996

Table 4.2: Apparent UK Market for Motorcycles, Scooters and Mopeds (£m at msp), 1992-1996

Table 4.3: New Registrations of Motorcycles and Mopeds by Capacity in the UK, 1991-1996

Table 4.4: New Registrations of Motorcycles and Mopeds by Capacity in the UK ( percent share), 1991-1996

Table 4.5: Top Five Selling Models in Motorcyles and Mopeds, 1995 and 1996

Table 4.6: Forecasts of Apparent Market Size for Mopeds, Scooters and Motorcycles by Volume and Value at 1996 Prices (units and £m at msp), 1997-2000

Component Manufacturing And Distribution

INDUSTRY STRUCTURE

CUSTOMER PROFILE

INDUSTRY SUPPLY

MARKET SIZE AND TRENDS

RECENT DEVELOPMENTS

FUTURE PROSPECTS

Table 5.1: Major UK Manufacturers of Automotive Components (£m), 1995/1996

Table 5.2: Apparent UK Market for Motor Vehicle Bodies and Vehicle Parts (£m at msp), 1992-1996

Table 5.3: Estimated UK Replacement Market for Autoparts (£m), 1996

Table 5.4: Forecast Apparent UK Market for Motor Vehicle Body Parts and Components (£m at msp), 1997-2000

Distribution

INDUSTRY STRUCTURE

DEALER NETWORK

IMPORTS

CUSTOMER PROFILE

RENTAL AND LEASING

INDUSTRY SUPPLY

ADVERTISING

MARKET SIZE AND TRENDS

RECENT DEVELOPMENTS

FUTURE PROSPECTS

Table 6.1: Sales of Selected Leading Car and Commercial Vehicle Distributors (£m), 1995/1996

Table 6.2: Car and Commercial Vehicle Importers (£m), 1994/1995

Table 6.3: British Vehicle Rental and Leasing Association Members' Vehicle Fleet of Cars, Minibuses and Commercial Vehicles to 3.5 Tonnes (000 vehicles),

1992-1995

Table 6.4: British Vehicle Rental and Leasing Association Members' Vehicle Fleet of Commercial Vehicles Over 3.5 Tonnes (000 vehicles), 1992-1995

Table 6.5: Estimated Total Fleet in the UK (number of units), 1995

Table 6.6: Short-Term and Long-Term Car and Commercial Vehicle Rental by Manufacturer ( percent), 1995

Table 6.7: Leading Motorcycle Dealers in the UK (£m), 1995/1996

Table 6.8: Motor Goods Distributors (£m), 1995/1996

Table 6.9: Main Media Advertising Expenditure by Selected Car Dealers (£000), Years Ending March 1993-1996

Table 6.10: Number of Motor Traders in Great Britain and Their Turnover (£m), 1992-1996

Table 6.11: Total Motor Trade's Turnover (£m), 1992-1996

Table 6.12: Analysis of Motor Trades Turnover of Retail Sales (£m), 1992-1996

Table 6.13: Analysis of Motor Trades Turnover of Wholesale (£m), 1992-1996

Table 6.14: Forecasts of Total Motor Trades Turnover (£m), 1997-2000

Consumer Research

CAR SALES

CAR RENTAL

ENGINE OIL

TYRES

MOTORCYCLES, SCOOTERS AND MOPEDS

GALLUP RESEARCH

Table 7.1: Breakdown of Age of Only Car or Most Recently Obtained Car (000 and percent of all adults), 1996

Table 7.2: Type of Only or Most Recently Obtained Car (000 and percent of all adults), 1996

Table 7.3: When the Only or Most Recently Obtained Car Was Acquired (000 and percent of all adults), 1996

Table 7.4: Number of Times a Car Has Been Hired in the Past 12 Months for Personal and Business Use (000 and percent of all adults), 1996

Table 7.5: Breakdown of Purchase of Engine Oil to Change or Top Up Car by Outlet (000 and percent of all adults), 1996

Table 7.6: How Many Car Tyres Have You Bought in the Last 12 Months (000 and percent of all adults), 1996

Table 7.7: Ownership and New Purchases of Motorcycles and Scooters by Engine Capacity (000), 1996

Table 7.8: Which, If Any, of the Following Factors Influence Your Decision When Buying a Car? ( percent of respondents), July 1995 and January 1997

Table 7.9: Which of the Following Best Describes the Average Amount of Time You Spend in a Car Each Day? ( percent), January 1997

Table 7.10: Respondents Who Regularly Drive a Car by Sex, Age, Social Class and Region ( percent), January 1997

Table 7.11: When Driving, I Often Get Irritated by Other Drivers by Sex, Age, Social Class and Region ( percent agreeing), January 1997

Table 7.12: When Driving, I Often Listen to Talk Programmes on the Radio/Music on the Radio/Tape Player by Sex, Age, Social Class and Region ( percent agreeing),

January 1997

Table 7.13: When Driving I Often Talk on a Mobile Phone by Sex, Age, Social Class and Region ( percent agreeing), January 1997

Table 7.14: I Dislike Driving for Long Periods of Time by Sex, Age, Social Class and Region ( percent agreeing), January 1997

Table 7.15: In the Last 12 Months, I Have Had Points Put on My Licence by Sex, Age, Social Class and Region ( percent agreeing), January 1997

Table 7.16: I Feel Modern Society is Too Dependent on the Car by Sex, Age, Social Class and Region ( percent agreeing), January 1997

Table 7.17: I Feel That the Government Should be Doing More to Promote the Use of Public Transport by Sex, Age, Social Class and Region ( percent agreeing),

January 1997

Table 7.18: I Feel That People Should Have to Retake Their Driving Test from Time to Time by Sex, Age, Social Class and Region ( percent agreeing), January 1997

Future Prospects

SALES BY MAIN AUTOMOTIVE SECTORS

TOTAL MOTOR TRADES TURNOVER

Table 8.1: Forecast UK Sales by Sector in the Automotive Industry (£m at msp), 1997-2000

Table 8.2: Forecasts of Total Motor Trade's Turnover (£m), 1997-2000

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HBI UK INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

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EXECUTIVE SUMMARY

Key Note estimates that in 1996, the total value of sales -- excluding value-added tax (VAT) -- by motor traders in the UK reached £97.1bn. Included in this estimate are sales of new and used cars, commercial vehicles, motorcycles, scooters, mopeds, replacement vehicle and body parts, tyres, repairs and servicing, petrol, oil and miscellaneous other motor products.

In the same period, the value, at manufacturers' prices, of UK production of cars, commercial vehicles and engines reached an estimated £21.34bn, and vehicle bodies and component parts an estimated £12.22bn, giving a total value of £33.56bn. Retail sales are valued at an estimated £38bn, which is approximately 39.1 percent of total motor industry sales.

Domestic production of cars, commercial vehicles, motorcycles and vehicle components has steadily increased, following heavy investment by UK and foreign manufacturers in upgrading engineering standards and expanding the motor industry's manufacturing capacity.

Rationalisation and restructuring is taking place, such as the merger between Lucas Industries and Varity Corporation, which make automotive components; and ERF and Western Star, which are makers of heavy commercial vehicles. Such mergers will strengthen their presence globally. Their operations will remain based in the UK. LDV and Leyland DAF have recovered strongly from their near extinction several years ago, and Triumph Motorcycles is working at full capacity producing 15,000

high-powered motorcycles per annum -- of which approximately 80 percent are exported -- compared with less than 1,000 motorcycles in 1992.

Imports of cars and commercial vehicles are still growing, but so are exports, as international trade in complete motor vehicles and components is expanding, resulting in more choice for the buyer. A consequence of falling trade barriers, is the globalisation of motor production with vehicle assembly plants in different countries, including the UK, being serviced with components and subassemblies that are produced and distributed around the globe.

Foreign manufacturers based in the US, Japan, Germany and France are the key decision makers which have absolute control over the future of the UK motor industry and its component suppliers. Their investment decisions are crucial to the location of factories and production levels, e.g. Ford is reducing its presence and production at the Halewood plant, whereas Nissan, Toyota and Honda are increasing production and introducing new models at their respective assembly plants, for export mostly to a variety of European markets.

Commercial vehicle manufacturers are always very dependent on the general economic climate, which affects their business customers. Sales of new commercial goods vehicles have recovered from the latest of the regular downturns that occur in the industry, but the boom sector is in public transport vehicles where demand for buses and coaches has soared.

There is an oversupply of goods vehicles in virtually every category, so manufacturers are offering a wide range of very attractive financial packages to operators who buy their vehicles in a static market.

The size of contract hire fleets is growing. Contract hire is very popular with large companies which once used to own their own fleets, as they can focus entirely on their own businesses and leave the transport to be administered by professional operators. Even for the smaller companies, there are many benefits in contract hire, as they are able to run newer vehicles instead of the older ones, which are increasingly being subject to stringent testing and controls. The latest Euuropean Union (EU) directives on emissions and pollution can only be met by investing in new commercial vehicles fitted with electronic engine management systems (EEMS).

Motor components are an integral part of the worldwide trade which has developed in conjunction with the internationalisation of the automotive industry. Many leading world class foreign companies have chosen the UK as a favoured manufacturing location, initially because of the revival of the British automotive industry, albeit under mainly foreign ownership, and then as a primary supplier to automotive companies in other countries. This has been the catalyst for new investment by the industry, which has transformed the status and importance of the industry to vehicle assemblers, and in its contribution to the national economy.

Distributors are very much affected by the changing attitudes of their suppliers and of the public. Volume manufacturers are favouring the main dealers which can shift a considerable number of cars, and eliminating the smaller independents from their franchises as these are uneconomic. Public expectations of dealers which supply them with cars are also becoming more demanding.

Both a strength and a weakness is the dependence of UK car manufacturers on the fleet markets for sales of new cars. The strength is that the fleet market is generally dependable, in that it will take large numbers of cars; the weakness for the manufacturers is that these are supplied either direct, or through their franchised dealers, at heavily discounted prices. Conversely, private buyers are being marginalised by having to pay close to the manufacturers' recommended prices for a new car plus delivery charges. The number of private buyers is consequently static, or even falling, but the volume manufacturers, in an effort to increase their sales to this sector, are registering many new cars with only nominal mileages for sale through their dealerships as `nearly new', at used car prices.

Many dealers are concentrating much of their sales efforts on the sale of used cars, where profit margins are higher than for new cars, and there is always a follow-up need for servicing. Franchised dealers are now advertising that they will service any make of car, and not just the products of the manufacturer that they represent.

Key Note estimates that by the year 2000, the total value of the automotive industry will reach £123.17bn, at constant 1996 prices, an increase of 26.8 percent on the 1996 figures. The retail market will remain the most important with sales at £55.2bn, increasing its share from 39.1 percent in 1996 to 44.8 percent in the year 2000.

Text © 1997 Key Note

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