What is the size of the UK Learner market/industry?

It is common knowledge among ADIs that the market for learner drivers in the UK is pretty big! Well how big is big? Is it big enough to support sub-industries such as instructor training, niche merchandise retail, apart from pub talk what are the actual numbers what is the actual size of the learner market? Statistics are published on the quantity of tests but I have yet to see figures in the public domain as to how big the market is in monetary terms, what is the dollar value or size of the industry. As a general note the industry and work levels vary significantly according to location this macro figure will not factor I will explore putting a figure on this and then talk about the learner industry itself. The top down macro method The total number of driving tests delivered in the last fiscal year was 1,569,069. The standard price for a driving test is 62 the weekend evening and bank holiday rate is 75. The government do not publish how many tests were at the weekend rate, so let us estimate using some rosy assumptions. We will come back to this later. Assuming 7 tests each scheduled for a day, and 52 weekends in a year that would give 104 days, 7 tests a day would give you 728 tests. This figure needs to be multiplied by the no of test centres nationally. According to my estimate there are 317 DSA test centres across the UK. No of Tests a day Weekends in a Year Weekend days in a year No of DSA test centres 7 52 104 317

Number Test conducted on the weekend rate = No of test Centres (no of tests a day x no of days a year) Plugging in the figures we get: 317(7x104) = The total monetary value of weekend tests The monetary value of standard tests Drawbacks -Unrealistic assumptions (we do not have so many bank holidays) -Few test centres would be able to man and deliver 7 tests every weekend -Driving tests are only the end product and not a good guide for the size of the learner market since many more driving lessons take place -317 test centres based on personal estimates not an accurate figure 1 Mr Alexis Martin. All rights reserved | www.mralexismartin.com 230,776 Tests delivered at the weekend rate 230,779 x 75 = 17,308,200 82,974,166 100,282,366

No of standard tests would be = 1,569,069 weekend tests (230,779) = 1,338,293 1,338,293 x 62 = = Total value of the market for driving tests

Review So a 100 million pound industry. My first reaction when crunching these figures was that this is not particularly big even with assumptions that are way of the mark. If you imagine the UK learner market as a company we would not even make the mid-table of theFTS250 index, on average the index companies have a market capitalisation of 955 million. Thus using the no of tests delivered as a guide as to the size of the UK learner market does not give a figure that is reliable or believable. The bottom up micro method This method involves working out the number of hours worked by an instructor. The problem here is a lack of credible information, there is no reliable source to check exactly how many hours instructors work across the country on any time frame weekly, daily or monthly. The majority of instructors have poor record keeping and take cash, specially the independents for whom payment system are an extra expense. But this is not too much of a barrier we can again make some assumptions to establish a ceiling. Assume 47,000 instructors on the register The average UK working week is 42 hours Assume the Average lesson rate nationally is 22PH Formula for a nationally weekly instructor take= No of instructors x No of Hours worked x Average hourly rate Plugging the figures in we get 47,000x42x22 = 43,428,000 To get the yearly figure and thus the size of the market multiply this figure by 52 Weekly take nationally 43,428,000x no of weeks in a year 52 = 2,258,256,000 That is a 2.2 billion industry. Drawbacks -Unrealistic assumptions again on the average lesson rate, and hours worked and so on -Not factoring in holidays and seasonal variations -Not factoring in logistical problems working 6hours a day 7 days a week what about the travel time?! Review Now this figure while putting a smile on the average instructors face is also unbelievable. Let us examine the assumptions: 42 hours a week every week! First let us assume 2 weeks of holiday so 50 weeks. Then 42 hours that would be 6 hours of lessons every day, this would not include travel time and so on this is at best un realistic, if you know instructors who claim 42hrs every week of the year I suggest you contact HMRC! since they are probably seriously understanding their true earnings! Adjustments

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Assume 50 working weeks, also 5 hours of lessons every day for 7 days giving you 35hrs a week let us call this the normal week. For peak busy periods assume 6 hours a day 7 days a week giving 42hrs a week , now let us say this is only possible for 5 weeks in the year, let us call this the peak week For the rest of the year the remaining 20 weeks out of 50 weeks let us assume 4 hours a day 7 days a week giving 28 hours let us call this the low week Summing it all up: Normal week 35hrs for 20 weeks Peak week 42hrs for 6 weeks Low week 28hrs for 20 weeks Total earning for the year No of instructors Nationally Size of industry (47,000 x 36,190) = 875 hours at 22PH =210 hours at 22PH =560 hours at 22PH = 19,250 = 4,620 = 12,320 =36,190 =47,000 =1,700,930,000

So after a few adjustments we arrive at 1.7 billion industry. It this figure more believable? All of these figures are pure speculation, and you can disagree and play around with these figures as much as you like that is the point, to provide a model, the purpose here is not to be accurate but just to get a ball park guide. Why do we need a guide? Well the industry without a doubt is in a state of intense flux. I am reminded the story of the blind men and the elephant each blind man has his own interpretation of what the animal is and so on, similarly every instructor, association and of course the DSA have their own idea of how the industry should shape up for the future; the debates rage over CPD no CPD, motorway lessons on or no motorway lessons on test, minimum no of hours or no minimum no of hours and so on. It is against this background it is worth having a common conceptual framework for the industry, the risk of not being on the same page is we distort to industry to the benefit of only a few which would serve none. So a conceptual framework what would this look like? Well let us go worth the classic grid!
50000 *CPD mandatory *large franchise domination *free market lesson price setting *CPD mandatory *tighter regulation for ADis *Large franchise domination *free market driven lesson price setting *high barriers to entry

No of instructors

1000

*CPD discretionary *Independent instructor domination *minimum lesson price *minimum no of lesson hours *low barriers to entry 50m Size of industry

*CPD discretionary *Independent instructor domination *minimum lesson price *minimum no of lesson hours

00

2bn

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Based on the above small industry with a low number of instructors would need a minimum price and a minimum no of lessons to make the industry viable, the other side of the coin is a large industry with higher number of instructors the price for lessons is determined by the market this type of industry would also require greater regulation. What is the direction for a normal growth industry form a small group of instructors to a larger group increasing market value. As it stands the driver training in the UK is now in reverse gear with a high number of instructors and declining market value, ultimately the risk here is if instructor numbers drop (due to the untenability of making a living) the industry would suffer a significant setback, this however might be welcomed by some instructors since it would ensure their livelihoods but this is short term perspective and a zero sum gain since few industries can survive cutting back on themselves. However if the powers that be are content with a smaller industry this may well be the direction we are heading. If the UK learner market were a company we would just about makes the grade for listing on the FTSE 250 index the index has an average market capitalisation of 950 million. If we decline from this we become prime candidates for an AIM listing for emerging and small companies, effectively becoming a cottage industry! Hopefully this post is a starting point not an ending point for debate and discussion.
50000

No of instructors

Current Direction of industry

Healthy Growth Phase

1000

00

50m

Size of industry

2bn

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