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Vehicle Breakdown Services Update Market Report 2012
Key Note Publications Ltd, Jan 2012, Pages: 89
This Key Note Market Assessment Update cover the key chapters of the full Vehicle Breakdown Services Market Assessment, last published in July 2010. The market is dominated by two major motoring organisations — the AA and RAC — and Green Flag, an independent network of breakdown technicians.
A number of organisations operate across the multiple sectors inherent to the market — the private/retail sector, the third-party sector, the commercial sector and the ad hoc recovery sector. The larger organisations, such as the AA and RAC, have also expanded the range of facilities that they offer to include financial services. These companies are often owned by large private equity firms; for example, the AA is part of Acromas, the RAC part of Carlyle and RBS Insurance (Green Flag’s owners) have been subject to a recent bid by CVC Capital Partners.
The vehicle breakdown market benefits from a steady rate of membership and this has helped to maintain revenues. However, the drop in new car registrations, as a result of the recession, has hampered growth with the value of the market increasing by just 0.9% in 2010. Motorists have also continued to cut back on the number and length of journeys that they take, as well as keeping their cars for longer. Furthermore, drivers are increasingly completing DIY repairs and prolonging the period between car services. This could result in an increased number of call-outs for assistance, with cars breaking down due to makeshift repairs.
Proposals from the Government could also lead to an increased number of call-outs. In July 2011, the Government began a review of the MOT test frequency, proposing to increase the period to 4 years on a new car and every 2 years thereafter. However, this proposal has been met with much opposition.
The recent severe winters have also seen an increased need for vehicle breakdown call-outs. On 20th December 2010, the RAC responded to 17,000 breakdowns in one day, many of these due to dead batteries and other cold temperature problems.
The UK market for vehicle breakdown cover benefits from its sustained membership levels; however, car registrations are forecast to decline in 2011. This, combined with reduced motoring, is likely to continue to stifle growth. As new registrations are expected to strengthen from 2013, growth should once again improve.
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