This report provides an overview and analysis of vehicle breakdown services in the UK for private motorists including those with fully expensed company cars.

The motorist vehicle breakdown services market has three main sectors. They are the ad hoc vehicle breakdown sector, the retail or private breakdown sector and the commercial breakdown sector provided through third party organisations such as affinity groups and car distributors.

Over the last 50 years, the vehicle breakdown services market has grown at a faster rate than both the car parc and car use, as motorists have increased the rate at which they call-out motoring organisations for roadside assistance. This has been due to the increasing complexity of cars and the change in the profile of car drivers.

Over the last decade, growth in the vehicle breakdown services market slowed, partly as a result of the recession in the early part of the 1990s and competition between the main organisations. However, since 1999, the industry has been revitalised by the change in ownership of the main motoring organisations providing vehicle breakdown cover.

The perceived benefits of motor organisation membership have changed in the last 5 years. Factors concerning reassurance have become more important while economic factors have become less important. Motorists are much more concerned about reassurance that they will get home quickly with or without their car than they are about the economic argument between motorist organisation membership and ad hoc services. Since 1995, the ad hoc sector has lost market share to private and commercial membership of motoring organisations, although it has also continued to grow.

One of the main reasons for the change in attitude towards motor organisation membership is the change in profile of the UK motorist. The dominance of middle-aged male drivers has diminished as the percentage of young and female drivers has increased. Drivers are less willing to perform roadside repairs while, at the same time, cars are becoming more complex. Cars are becoming more reliable but it is becoming increasingly difficult for drivers to repair them by the roadside, partly as a result of the need for specialised diagnostic equipment and sealed accessories.

During the 1990s, the promotional emphasis of the main motoring organisations has changed to accentuate reassurance rather than economic arguments. Nevertheless, competitive pressure between the main motoring organisations has put price pressure on the large number (1,500-2,000) of vehicle recovery companies in the UK, many of which are local garages.

Since 1998, the ownership of three of the top four vehicle breakdown organisations has changed. Leading up to and since the changes of ownership, the main vehicle breakdown organisations have reoriented their strategies. This has allowed the industry to revitalise and has begun to reward the industry with significant improvements in membership of motoring organisations. Most of the improvement has been in the commercial sector but private membership also increased in 2000, stopping a decline in membership for some motoring organisations.

The main motoring organisations, including the Automobile Association (AA), Royal Automobile Club (RAC) and Direct Line Rescue, have strategies that are designed to offer more than just vehicle breakdown services. The idea behind the strategies is to develop a much closer relationship with their customers. Customers are no longer simply users of the vehicle breakdown services but motorists with a broad range of requirements which the motoring organisations aim to satisfy.

As well as concentrating on a broader range of motorists’ needs, the main competitors (with the exception of Direct Line Rescue) have increased their commitment to the commercial or third party sector, which is responsible for most of the growth in the market over the last 2 years.

Despite commitment by the Government to develop a framework to increase the use of public transport at the expense of private transport, car use and the demand for vehicle breakdown services is likely to increase. In order to satisfy growth and profit targets, the main motoring organisations will develop more products to offer to their customer bases. Although the market potential for membership vehicle breakdown services is far from saturated, the ad hoc sector is still growing, it may be that expansion overseas is considered a higher priority for the main motoring organisations in the future.