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Squeeze on Motoring Continues to Slow Vehicle Breakdown Growth

Article Date

23
01
12

According to Vehicle Breakdown Services, a new Market Assessment Update from marketing intelligence provider, Key Note, the vehicle breakdown recovery market was worth approximately £1.28bn in 2010 and has continued to grow despite the recession, falling car registrations and increasingly aggrieved motorists.

 

The vehicle breakdown market usually benefits from a rise in new car registrations -- a revenue stream that suffered significantly during the recession. New car registrations fell by 17% between 2007 and 2009, with a growth of only 1.8% observed in 2010. Fleet and business registrations also suffered significantly between 2007 and 2009, although both sectors returned to growth in 2010, unlike the private sector. This decline has led to Key Note estimating a growth of below 1% in the vehicle breakdown market for 2009 and 2010.

 

The current squeeze on motorists, for example, due to rising fuel prices, expensive insurance premiums and diminishing consumer buying power, has led to a decline in the number of car journeys that people now take. Recent motoring surveys have revealed that motorists are now employing a variety of methods to cut the cost of running a car. Many people are turning to DIY motor repairs and prolonging the period between car services. However, ironically, this could bolster the vehicle breakdown services industry, as DIY repairs and un-serviced cars are likely to lead to increased call outs due to broken down vehicles. The Government too could inadvertently assist the market with its proposals to prolong the time period between a cars' MOT test from 1 to 2 years.

 

Despite meagre growth in the vehicle breakdown market in recent years, the number of registered members for the major breakdown cover providers is estimated to have remained relatively stagnant over the past 5 years. Major operators, such as the RAC, have introduced innovative ways to generate further custom. For example, in winter 2010, the company introduced a single-use call-out gift voucher worth £29.
New car registrations are expected to fall again by 5.3% in 2011, although registrations of light commercial vehicles (LCVs) should experience strong levels of growth. New registrations are expected to increase by 2.1% in 2010, which should, in turn, boost the vehicle breakdown services market, with forecasts predicting a growth of 1% for the first time in 3 years for the industry. Key to the markets sustained long-term growth is the stabilisation in the cost of motoring, the increases in which over the past few years has resulted in a large number of motorists using their cars less frequently.

 

 

View FREE Executive Summary & Table of Contents for Vehicle Breakdown Services

 

 

Press enquiries: Jack Sykes at Key Note at jsykes@keynote.co.uk or 0845 504 0452. Press/review copies of the report are available on request.