Auto Trader Owners’ Guide: ‘The Future of Motoring’Q4 2012
CONTENTS Introduction 3 Key findings 4 Long road to recovery 5 Young drivers at risk 67 Top tips to help young drivers reduce costs 8 Cost of motoring set to soar 9 10 Motorists forced to adapt to rising costs 11 Future of motoring 12 Cars of 2023 13 - 15 About Auto Trader 16 2
INTRODUCTIONWelcome to the Auto Trader Owners’ Guide ‘Future of Motoring’ report,which this quarter explores the anticipated evolution in motoring over theyears to come. We have surveyed 3,495 motorists to gauge their views onwhat the future of motoring has in store, looking at everything from soaringrunning costs to the possibility of flying cars. We have also worked withFuturologist Ian Pearson whose insights and predictions have helped shapethis report.Motoring as we know it is set to change drastically over the next ten years as a direct resultof economic, technological and demographic changes. Although Britain may have come outof the double-dip recession, the financial squeeze continues to be felt across all aspects of21st century life. The younger generation are the most at risk, faced with limited personalfinances, a crippling rate of youth unemployment and constant price hikes to thecost of motoring.Although economic recovery will be slow, companies – not just automotive – are heavilyinvesting in research and development, so we can expect significant technologicaladvancements that will considerably change how we drive over the coming years. Trialsare already underway for a new era of motoring; this includes self-driving technology, aconcept that is expected to be a common feature on our roads in as little as ten years time.Futurologist Ian Pearson believes that gradually cars will become smart enough to do all thehard work for us: drive us from A to B, reduce accidents and comply with speed limits andother road laws. As electronic control of cars is likely to eventually become mandatory, thisis sure to have a major impact not only on motorists but across all areasof transportation.Motorists will be forced to adapt their current driving behaviours if they are to keep upwith constant increases to the cost of motoring and to make way for new technologicaldevelopments. One thing we can be sure of is that a new dawn of motoringis fast approaching. Nathan CoeGroup Director, Auto Trader 3
Key findings 62% anticipate cars will be able to communicate with each other within the next ten years 42% expect self-driving cars to be a common feature on UK roads by 2023 the amount motoring costs in the UK could reach by 2023 £135bn 55% of motorists believe they could not afford to be a first time driver today think the government is not doing enough to support road users 98% of the future4
sLong road to recoveryMarket shows signs of recovery, but future looks bleakfor young drivers2012 was a turbulent year for the automotive industry. Following six months of decline, themarket started to show small signs of recovery as the UK emerged from the double-diprecession reporting 1% GDP growth in Q3 2012. While GDP declined once more in Q4 2012, theautomotive industry indicated signs of economic healing, reflected by Auto Trader’s Retail PriceIndex which provides insight into average used car prices. December 2012 marked the highestaverage price for used cars for the year (£8,982) and Q4 2012 showed a reassuring 2.3% quarter-on-quarter increase.“ The economy will follow a ‘Loch Ness Monster’ recovery pattern featuring multiple dips. This will mean ongoing and increasing pressure ” on consumer spending power. Ian Pearson, FuturologistAverage Asking Price Q4 £9,200 Average Asking Price in Q4 Average Asking Price in Q4 £9,200 £9,200 £9,000 -3.2% £9,000 -3.2% 1.7% 1.7% £9,000 £8,800 £9,056 £8,800 £8,800 £8,600 £8,912 £8,600 £8,600 £8,764 £8,400 £9,056 £9,056 £8,912 £8,912 £8,400 £8,400 £8,764 £8,200 £8,764 £8,200 £8,200 £8,000 £8,000 £8,000 Q4 2010 Q4 2010 Q4 2010 Q4 2011 Q4 2011 Q4 2011 Q4 2012 Q4 2012 Q4 2012 FAST FACT: Although the Auto Trader Retail Price Index reveals the average asking price of a car has increased in the latter half of 2012, prices for the year are still 2% lower than in 2011 5
Young drivers at riskAlthough we have seen green shoots of economic recovery, 42% of motorists think we are not yetover the worst and that we will continue to feel the financial squeeze in 2013. Motorists believe thiswill impact most heavily on young drivers who face being priced off the road as a result of soaringmotoring costs, including new insurance legislation, as well as a high rate of youth unemployment. • 55% of motorists believe they could not afford to be a first time driver today • his is especially true of women – just 28% of those who have been driving for over T five years think they could afford to be a first time motorist today compared to 59% of men • Over half (53%) of 17-24 year olds believe the worsening economic situation and increased financial pressures will lead to a decrease in the number of young people learning to drive over the next decade. This is compared to just a third (33%) of over 65 year olds • 71% think it will be difficult for young people to buy cars in ten years time • 98% of consumers think the government is not doing enough to support future road usersWhat should the Government be doing to support future road users? They should regulate fuel costs better 78%They should be lowering driving-related taxation 52% They should be preparing the country for new types of engine and fuel 46% They should be investing more in infrastructure 40% They should re-write driving laws to reflect the situation facing 21st century motorists 31% They should be investing more in the British car industry 27% Other 5% They are doing enough already 2%6
Female motorists hit hardest following new gender rulingYoung female drivers are set to lose out following the introduction in December 2012 ofnew European rules banning insurers from taking gender into account when calculatingrates. Prior to the ruling, female motorists aged 17-25 paid on average £1,000 less thantheir male counterparts in annual car cover.1 According to the Association of BritishInsurers (ABI), the new ruling could result in a 25% increase in the annual cost ofinsurance for young female drivers.2 This could lead to one in four women (24%) beingpriced off the road as they struggle to keep up with rising costs according to researchfrom uSwitch.com.3The new unisex rate is likely to have a significant impact on the market as a whole.We could see an increase in the average cost of insurance as risk rises, as well as areduction in the number of young female drivers on the road. One in four female drivers could be priced off the road by new EU law “ In years to come, we are likely to see road train technology that lets one driver control a line of vehicles. This could be used to allow semi-autonomous convoys of young drivers under the control of a more senior leader to reduce accidents and, ” hence, drive down the cost of insurance. Ian Pearson, FuturologistLearning to drive alone costs on average £1,1274 in the UK and first time motorists are beingdoubly hit by increases in the price of older vehicles. Traditionally young drivers buy cheaperand older cars and according to Auto Trader’s Retail Price Index the price of vehicles overten years old has gone up 5%, so they now average £2,414, making it even harder for youngdrivers to get behind the wheel.1 Gocompare.com, as of July 2012, the average difference on Gocompare quoted premiums in the 17-25 age bracket was £1,060 (£2,394 for men against £1,334 for women).2 Association of British Insurers (ABI), Research Paper No. 24, (2010).3 USwitch.com, ‘New insurance could force one in four women off the road’, (November 14 2012). 74 Assuming learner passes both theory and practical test (priced £31 and £62 respectively) first time round and based on an average of 47 lessons priced at £24 each.
Top tips to help young driversreduce costs 1. onsider buying a new car: Buying a new car might seem like a hefty C investment but it could save you money in the long run. New cars are designed to give out fewer emissions, saving you money on your insurance and tax. Generally speaking, maintenance costs on new cars are considerably lower and they also come on average with a minimum three year warranty. 2. hink about leasing a car: The majority of dealerships today T offer a car leasing option, perfect for young drivers who may not have the upfront capital to buy a car outright. Leasing a car over a set period of time means you pay a flat monthly rate and many packages also include maintenance costs, so you know exactly how much the car will be setting you back when you sign the contract. 3. etrol is just as economical as diesel...and cheaper: P Don’t rule out petrol models if you are looking for an economical car. While costs may vary depending on engine size and mileage, modern petrol engines are becoming almost as economical as diesel cars and will also help you save money at the pumps. 4. e rewarded for good driving: Some car insurers are offering B new technology ‘telematics’ which monitors how you drive and rewards safe motoring with cheaper premiums. The number of insurers offering this service is expected to become more widely available and is a great option for all responsible drivers. 5. on’t be scared to haggle: Do your research and shop about to D make sure that the car’s price is in line with other cars of its kind to ensure you pay its true value. If you’re confident, you can haggle anywhere up to 10% off the original asking price. There could also be room for negotiation across finance and servicing costs of a car.8
Cost of motoring set to soarMotorists fear costs could double over next ten yearsBrits fear that by 2023 motoring costs in the UK could account for over £135bn includingfuel prices, insurance and driving related taxation.Our research revealed that the average car owner currently spends £2,290 on motoring costseach year and some hard-hit Brits fear this amount could double to £4,580 in the next ten years.This is reflected by the Auto Trader Retail Price Index which reveals that the average priceof a used car has also increased across all regions in the UK.Average asking pricewinners andGraphic: Illustrate regionalof a used car Excel doc sheet 3.losers (Price Indexin Q4 2012 Map of the UK/rankup orDesign ideas:regions – podium/medals/thumbs thedown re where most expensive) Scotland £9,936 North East £8,387 Northern North Ireland West £9,963 £8,390 Yorkshire Yorkshire £9,490 East Midlands £8,680 East West Anglia Midlands £8,700 £8,143 Wales £8,408 London £9,392 South South East West £9,121 £7,968 9
Alternative fuel vehicles gaining favour with motorists,but market share still lowThe number of alternatively fuelled vehicles for sale through Auto Trader has almost doubled overthe last three years, and this looks set to grow as motorists look for ways to dodge rising fuelcosts. The Auto Trader Retail Price Index reveals a significant quarter-on-quarter decrease of6% (£1,066) in Q4 2012 in the average price of alternatively fuelled cars as they start to hit themainstream. However, this still remains a very small percentage of cars advertised on Auto Trader,a trend which has been seen across the industry as a whole. Research from GfK has revealed themain inhibitors to people buying an electric vehicle are the high purchase price - compared to aconventional car - and practical issues relating to the range of the batteries between charging, thelength of time that recharging takes, and the availability of charging points.5 Petrol cars see an increase in price this quarter of 3% to £7,034. Q2 2012 saw the lowest priced petrol cars in the last three years but the second half of 2012 saw prices pick up again. Petrol Alternatively fuelled vehicles saw Electric quarter-on-quarter decreases of 6% and year-on-year decreases of 2% as the average price drops £1,066 from Q3 to Q4. While the electric car revolution may be taking longer to get into gear than initially ry Commenta anticipated, manufacturers are still investing heavily in alternatively fuelled vehicles and, if prices continue to fall, we could see a growth in market penetration.10 5 GfK, Automotive Sustainable Mobility Report, (2012).
Motorists forced to adapt torising costsConsumers look to offset price increases by changing theirmotoring behaviourConsumers acknowledge they will have to change their current driving patterns if theyare to keep up with the relentless increases to the cost of motoring. How will consumers change their motoring behaviour? 49% 41% 23% 18% 13% 4% Drive fewer Buy more Cut down I will not Cut down on Take on miles or cost effective spending change the number debt to pay drive less cars in other my spending of cars in for rising frequently non-motoring habits to my family motoring areas compensate costs for higher motoring costs This year 22% of motorists who bought a car chose their vehicle specifically to help ry Commenta reduce running costs. This number is set to increase as consumers become more savvy when it comes to getting the most bang for their buck. We’ve seen a surge in sales of low emission cars, such as the two cylinder fiat 500 which comes with £0 annual road tax. It’s almost impossible to find one now as they have become so popular! 11
Future of motoring‘Road tribes’ of the future “ As motorists continue to feel the economic squeeze, almost one in five of those surveyed would consider money saving tactics such as car pooling - that’s treble the current amount! As motorists are forced to adapt their current driving behaviour we are likely to see the emergence of new social networks to facilitate alternatives, such as car pooling, with set regulations. This will allow sharing of costs and enhance security so that strangers can share safely. Social networks would work to match journeys to passengers and we could see ‘road tribes’ emerging, such as school run mums or commuters. ” Ian Pearson, FuturologistThe next generation of carsConsumers have become accustomed to high-tech gadgets and devices across all areas of 21stcentury life, and motoring is no exception to this trend. Motorists anticipate drastic changes tothe present state of driving making it safer, easier and more sustainable.12
The Cars of 2023Technology motorists expect to see in next ten years 84% 76% 62% 76% 78% 80% 62% Technology Voice command/ Turning your Augmented Airbags that help Energy storing Cars that letting you recognition to windows reality stop cars panels communicate 42% know where control the car into touch dashboards with each Self-driving cars there are parking screens other 88% spaces Electric cars “ Although only 7% of women surveyed for this report said they would be willing to pay more for extra gadgets such as augmented reality dashboards compared to 18% of men, we are likely to see a shift in perception as such technology becomes more commonplace. Women will want more augmented reality than men when it is used to augment view with familiar landmarks. Women traditionally navigate more by landmarks than men and are sure to benefit ” from social, tourist and retail information that such technology would provide. Ian Pearson, Futurologist Women Men 1 A irbags that help protect Top Five 1 Electric powered cars the car’s exterior 2 Energy storing panels 2 Electric powered cars innovations 3 A irbags that help protect 3 Energy storing panels Motorists Would the car’s exterior 4 4 T echnology that indicates T echnology that indicates where there are parking Be Willing To where there are parking spaces spaces Pay For 5 5 Self-driving technology Self-driving technology 13
Cars designed around you “ Already we’re seeing great technological improvements when it comes to tailoring everything from insurance rates to interior design around the individual. ‘One size fits all’ policies and cars will become a thing of the past as consumers demand a more personalised experience. In the years to come, a couple could have their own décor in the same shared vehicle thanks to improvements in fabric material which can be self cleaning, emit light, change colour and even give off scents under electronic control! Glass, PC and particularly Games manufacturers have taken interest in virtual developments in the car industry. Cars could soon boast ” touch-screen windows, 3D technology and allow for all elements of the car to be manipulated to make for a more engaging environment. Ian Pearson, FuturologistLook, no hands!A new and revolutionary innovation is fastapproaching: the driverless car. While only “The car could17% of motorists surveyed for this reportsaid this is something they would be willing become a totallyto pay for, this new technology is set to digitally immersivebring about profound changes to the futureof driving. The new technology, currently environment!”being trialled by multiple companies,including Google, is expected to be a common feature on our roads in as littleas ten years time.Autonomous cars are expected to bring many majorbenefits including:- major reduction in accidents due to sensor technology that predicts A and avoids collisions- Creating up to five times more space for vehicles on the roads by cars driving nose to tail- reeing up parking spaces in congested areas by dropping you off and coming F back to pick you up when you are ready “ Self-driving cars will be far more attractive to young drivers due to reduced accidents and, hence, insurance. This is likely to accelerate market penetration. ” Autonomous technology will eventually be a basis of public transport as well as corporate and private travel, which will bring down costs. Ian Pearson, Futurologist 14
Cars won’t be flying anytime soon! “ Although flying cars do exist in prototype, it is very doubtful that we will see many flying cars in the next few decades. Realistically, they are only likely to become about as common as helicopters are today. In order to make them safe, flying cars would have to be completely autonomous and would ” need far better computers and communication networks than we currently have. They will also be incredibly expensive! Ian Pearson, Futurologist Although the sci-fi vision in ‘The Fifth Element’ is fun, we aren’t likely to see flying cars Kobal any time soon!The final wordElectronic control of cars could gradually become mandatory to reduce accidents andforce compliance with speed limits and other road laws. As cars do all the hard workfor us, motorists will experience reduced freedom of driving style. However, with all thetechnological advancements and trials currently underway, our passion for the open road issure to be reignited as we make way for a new era of motoring. 15
ABOUT AUTO TRADERAuto Trader is the UK’s number one motoring digital marketplace with over 11 million monthly unique users, carrying outover 135 million searches on more than 350,000 new and used vehicles. Over three million people access Auto Trader via theirmobile devices every month, through the mobile-optimised site and apps developed for iPhone, iPad, Android and Nokia. AutoTrader is part of Trader Media Group. For more information, visit www.autotrader.co.uk.Trader Media Group is Europe’s largest specialist multi-media group and supplier of leading automotive marketing productsand services. The Group also offers a range of other specialist online publications including vans.autotrader.co.uk, trucks.autotrader.co.uk, plant.autotrader.co.uk, farm.autotrader.co.uk, autotrader.co.uk/bikes, caravans.autotrader.co.uk andmotorhomes.autotrader.co.uk. Trader Media Group operates in the UK, Ireland and South Africa and is jointly owned byGuardian Media Group and Apax Partners. For more information, visit www.tradermediagroup.com.About Ian PearsonIan Pearson is a leading Futurologist, identifying and explaining the key changes ahead in every sector of business andsociety that will arise as a result of rapidly changing technology.Ian graduated in Applied Mathematics and Theoretical Physics from Queens University, Belfast. He has worked in mostbranches of engineering and as a futurologist in the telecoms sector before setting up Futurizon, providing consultancyand strategy on future technology.Research methodologyConsumer Research:In collaboration with eDigital Research, Auto Trader surveyed 3,495 motorists* in December 2012 on the followingindustry-related topics:- The general economy- Vehicle running and ownership costs- Personal finances and the future of motoring for young drivers- Predictions about technological developments in motoring*Motorists are defined in this instance as driving licence holders aged 17 years or more, and respondents wererecruited via the Auto Trader consumer panel, eDigital Research panel, and social media.Auto Trader Retail Price Index research methodology:Base Data and how average prices are calculated: The Auto Trader Retail Price Index monitors the movementof advertised asking prices based on used vehicles advertised on autotrader.co.uk since January 2010. Asthis represents over 80% of all available used cars for sale in the UK, Auto Trader is in a unique position tocomment on variations in advertised prices.With more than 15,000 dealers – an estimated 85% of all car dealers in the UK – advertising their vehicles onthe Auto Trader website and the ability to sample up to 400,000 individual used cars each month, the impact ofnatural fluctuations in the profile of the used cars (due to variations in age, mileage, condition) is minimised.Data Cleansing for Auto Trader Retail Price Index: Using a variety of business and proprietary rules, raw advertdata is cleansed to ensure an accurate reflection of prices and to remove any anomalies such as entries thatlack sufficient information or duplicates.For all media enquiries, please contact the Auto Trader Press Office at Citizen Relations:T: 020 3451 9400E: firstname.lastname@example.org